The key to increasing economic growth is to ____
a. increase tax rates
b. increase labor productivity
c. increase inflation
d. increase population growth
e. increase the level of federal govt spending
Ans: b. increase labor productivity
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The process by which an increase in government borrowing results in less borrowing by businesses and consumers for private investment is called
A. expansionary fiscal policy. B. the business cycle. C. crowding out. D. contractionary fiscal policy.
Refer to the accompanying table. According to the table, Pat has the absolute advantage in: Pizzas Made Per HourPizzas Delivered Per HourCorey126Pat1015
A. making pizza. B. delivering pizza. C. neither making nor delivering pizza. D. making and delivering pizza.
Exhibit 17-5 Short-run and long-run Phillips curve
Suppose the government shown in Exhibit 17-5 uses contractionary monetary policy to reduce inflation from 9 to 6 percent. If people have adaptive expectations, then:
A. the economy will remain stuck at point E1. B. the natural rate will permanently increase to 8 percent. C. unemployment will rise to 8 percent in the short run. D. unemployment will remain at 6 percent as the inflation rate falls.
Suppose there are two firms on a river and the production processes of both require clean water. The upstream firm's process dirties the water, which it dumps back into the river. The downstream firm must clean the water before using it in its production
process. If the two firms would merge A) the external costs of the merged firm would equal the external costs of the upstream firm, which would then be passed on to its customers. B) the total costs of production fall since the external costs disappear. C) the external costs of the upstream firm are private costs after the merger. D) the internal costs of the downstream firm become external costs of the merged firm.