Under a system of marketable pollution permits, the government:
A. chooses a level of pollution.
B. distributes permits to polluting firms.
C. allows firms to trade permits.
D. All of these
Answer: D
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A government surplus is
A) when it spends more than its income. B) when it owes more than what it is owed. C) when its income is higher than its spending. D) when it is owed more than what it owes.
A necessary condition for a money economy to be self-regulating is that
A) wages must be flexible in an upward direction, but not in a downward direction. B) the economy must always be operating on its institutional production possibilities frontier. C) wages must be flexible in a downward direction, but not in an upward direction. D) interest rates must be flexible in the credit market. E) none of the above
Which of the following is a major goal of short-run macroeconomic policy?
A. Shift the production possibilities curve outward. B. Shift the aggregate supply curve to the left. C. Move toward the production possibilities curve and full employment. D. None of the choices are correct.
When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:
A. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market. B. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market. C. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market. D. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.