Fiscal policy refers to changes in
A) the money supply and interest rates that are intended to achieve macroeconomic policy objectives.
B) federal taxes and purchases that are intended to fund the war on terrorism.
C) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.
D) federal taxes and purchases that are intended to achieve macroeconomic policy objectives.
D
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Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?
A) $1.00 B) $1.25 C) $1.50 D) $1.75
In an ad for insurance, the text reads "Life's an adventure, and there are plenty of perils awaiting your jewelry: a lost or broken stone, theft, accidental loss, damage, mysterious disappearance Have you thought about insurance?"
What is the economic reasoning for an individual to buy insurance? A) Individuals who buy insurance are profit maximizers. B) Individuals who buy insurance are rational. C) Individuals who buy insurance are dishonest and can profit from dishonesty. D) Individuals who buy insurance increase their expected utility by owning insurance.
Some consumer electronics products such as plasma TVs, DVD players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of
economies of scale and cheaper technologies). Which of the following is the best explanation for this observation? A) Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. B) More firms are likely to enter the consumer electronics market over time, forcing market prices down. C) Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. D) After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive consumers.
Explain how a country whose currency is the reserve currency can use monetary policy for macroeconomic stabilization. In particular, explain the result if that country doubled its domestic money supply
What will be an ideal response?