Explain the difference between general grants and categorical grants. Under what circumstance will they have the same impact? In that case, will one have an advantage over the other?
What will be an ideal response?
General grants come with no strings attached while categorical grants come with a specific spending purpose. A categorical grant will have the same impact as a general grant if the receiving government would have spent as much as the grant anyway. Given the higher record-keeping and monitoring costs for categorical grants, under the above condition the general grant is preferable.
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Suppose wages increase but employment decreases. These changes most likely were caused by
A. a decrease in labor demand. B. an increase in labor supply. C. a decrease in labor supply. D. an increase in labor demand.
Price controls may be thought of as
A) a restraint on the rationing function of prices. B) useful tools that promote production. C) necessary in market economies. D) the freeing-up of free market forces.
Monetary policy refers to
A) actions taken by banks and other financial institutions regarding their approaches to lending, account management, etc. B) changes in the money supply to achieve particular economic goals. C) changes in government expenditures and taxation to achieve particular economic goals. D) the change in private expenditures that occurs as a consequence of changes in the money supply.
In the swimming pool market, supply and producer surplus both just fell. What most likely happened to cause this?
a. Price levels increased. b. Price levels decreased. c. A subsidy was given. d. A tax was removed.