Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the most liberal Democrat suggests an increase to Food Stamp (SNAP) allotments. Suppose the most conservative Republican suggests an increase in defense spending. Each is arguing that their plan will get the most good for the money. What is going on here?
A. Neither are using marginal analysis.
B. Only the Republican is using marginal analysis.
C. Only the Democrat is using marginal analysis.
D. Both are employing marginal analysis, just from different perspectives.
Answer: D
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The infant industry argument calls for active government involvement
A) only if the government forecasts are accurate. B) only if some market failure can be identified. C) only if the industry is not one already dominated by industrial countries. D) only if the industry has a high value added. E) only if the industry is independently able to earn high returns.
The long-run aggregate supply curve will shift to the right if the:
A. potential output of the economy expands. B. economy loses productive capacity. C. economy experiences a supply shock. D. profit levels of firms increase.
Recurring fluctuations in business activity over the course of one year are known as
a. seasonal variations. b. random fluctuations. c. the trend. d. the business cycle.
Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are
a. a substitute good.
b. a normal good.
c. an inferior good.
d. a law-of-demand good.