The inability of Congress to pass a stimulus package after September 11, 2001, could be used as an argument for
A. activist fiscal policy.
B. activist monetary policy.
C. expansionary fiscal policy.
D. contractionary monetary policy.
Answer: B
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Full-employment output is the level of output that is produced when the labor market is in equilibrium
Indicate whether the statement is true or false
Which of the following statements best summarizes the law of diminishing marginal returns?
A) In the short run, as more labor is hired, output diminishes. B) In the short run, as more labor is hired, output increases at a diminishing rate. C) In the short run, the amount of labor a firm will hire diminishes as output increases. D) As more labor is hired, the length of time that defines the short run diminishes.
Behavioral economics extends traditional economic models by
A) including insights from psychology and human cognition models. B) modeling behavior rather than prices. C) admitting that individuals are irrational. D) admitting that incentives are very important.
The market supply curve can be derived by
A) vertically adding the individual supplies at each quantity level. B) multiplying the price and quantity supplied at each price level. C) horizontally adding the individual supplies at each price level. D) looking at the capacity utilization in the largest firms in the industry.