Ray's Radios believed the synergies between radio production and battery production could be realized if he expanded. However, due to overseeing the battery expansion Ray devoted less time to the radio business leading to the radio unit costs increasing. Ray's Radios is experiencing
a. Economies of scale
b. Economies of scope
c. Diseconomies of scale
d. Diseconomies of scope
d
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Which of the following is not classified as a final good?
A. Fresh vegetables purchased by a restaurant B. New clothing purchased by a college student C. A new car purchased by a family D. A new machine purchased by a business
The expenditure approach to GDP accounting includes:
a. wages and salaries. b. net exports. c. net interest. d. corporate profit. e. proprietors' income.
The government wishes to reduce he price level by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and a government spending multiplier of 5, which of the following policy prescriptions would reduce the aggregate demand curve by $400 billion?
A. Decreasing government spending by $400 billion and increasing taxes by $100 billion. B. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. C. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. D. Decreasing government spending by $100 billion and keeping taxes the same.
Using the U.S. as an example, explain why rising budget deficits on the part of a federal government creates a potential point of conflict between fiscal and monetary policymakers.
What will be an ideal response?