The main reason that the deficit grows in a recession is that
a. the government reacts quickly and adjusts taxes to compensate.
b. monetary policy that targets interest rates causes the costs of borrowing to fall.
c. the deficit causes the recession, and reducing the deficit cures the recession.
d. many forms of taxes act as automatic stabilizers.
d
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Which of the following statements is TRUE?
A) At the efficient quantity, marginal social benefit equals marginal social cost. B) Marginal social cost increases as the quantity produced decreases. C) Marginal social benefit decreases as the quantity consumed decreases. D) If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient.
Refer to Table 5.4. If outcomes 1 and 2 are equally likely at Job A, and if at Job B the $20 outcome occurs with probability .1, and the $50 outcome occurs with probability .9, then
A) Job A is safer because the difference in the probabilities is lower. B) Job A is riskier only because the expected value is lower. C) Job A is riskier because the standard deviation is higher. D) Job B is riskier because the difference in the probabilities is higher. E) There is no definite way given this information to tell how risky the two jobs are.
Market failure means that
A. an unexpectedly harsh winter shuts down a factory. B. the strike organized by unionized employees fails to achieve its goal. C. too many outdated products are offered for sale in the local supermarket. D. there is overallocation or underallocation of resources to certain economic activity.
Which of the following is the most important source of revenue for the federal budget?
A. The corporate income tax. B. Social Security and unemployment taxes. C. The federal personal income tax. D. Sales tax.