Which of the following is true with regard to the use of countercyclical fiscal policy as a stabilization tool?
a. Successful fiscal policy would be easy to achieve if Congress had greater access to forecasting tools.
b. Successful fiscal policy is difficult to achieve because Congress acts slowly and our ability to predict the future is limited.
c. Successful fiscal policy is easier to achieve today because econometric forecasting models are highly accurate.
d. Congress and the President have persistently altered fiscal policy in a stabilizing manner.
B
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Consider a firm that produces peanut butter. An increase in the price of peanuts will cause the firm to lower its output because
a. fixed costs will rise. b. marginal cost will rise. c. the price of peanut butter will rise. d. marginal revenue will fall.
Which of the following does NOT help organize trade?
A) property rights B) markets C) the production possibilities frontier D) None of the above because all these answers given help organize trade.
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?
a. the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses b. the cost of the steel that is used in producing automobiles c. the cost of the electricity of running the machines on the factory floor d. All of the above are correct.
Suppose that monetary neutrality holds. Of the following variables, which ones do not change when the money supply increases?
a. real interest rates b. inflation c. the price level d. real output e. real wages f. nominal wages