Which of the following is an example of discretionary fiscal policy?
A) an increase in unemployment insurance payments during a recession
B) an increase in income tax receipts with rising income during an expansion
C) the tax cuts passed by Congress in 2001 to combat the recession
D) a decrease in food stamps issued during an expansion or boom
Answer: C
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Governments can most effectively encourage a firm to produce the efficient level of output of a good whose production causes a beneficial externality by
A. increasing the demand at every price for the good. B. subsidizing the production of the good. C. taxing the production of the good. D. imposing a price ceiling on the good.
Because only competitive firms are price takers, only competitive firms have supply curves.
Answer the following statement true (T) or false (F)
If the elasticity of demand for a good at a certain price is greater than one, we describe demand as _____.
(A) Unitary elastic (B) Elastic (C) Inelastic (D) Variable
Market power is the ability of a firm to
A. Act as a price taker. B. Advertise. C. Increase the number of substitute goods. D. Control the price and quantity supplied.