When total expenditures exceed the economy’s potential GDP, the proper fiscal policy is to
A. increase transfer payments to the poor and elderly.
B. cut personal income tax rates.
C. decrease government purchases.
D. increase purchasing power.
Answer: C
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The price elasticity of supply
A) is the slope of the supply curve. B) is the percentage change in quantity supplied divided by the percentage change in price. C) is always negative. D) does not vary between the long and the short run.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A. a change in society's preferences for hybrid cars versus motorcycles. B. an increase in economic growth. C. an increase in unemployment. D. a reduction in unemployment.
The external costs associated with tobacco are estimated to be approximately
A. nonexistent. B. $5 a pack. C. $1 a pack. D. 10 cents a pack.
When a large amount of output is produced per unit of the input, the input is said to exhibit
A. low productivity. B. marginal productivity. C. derived productivity. D. high productivity.