An annually balanced federal budget
A. enables fiscal policy to be implemented in a timely and selective manner, without the drag on consumption and saving that is usually associated with federal borrowing.
B. essentially eliminates the use of fiscal policy for stabilizing the economy.
C. could bring the economy up to full employment if a deflationary GDP gap exists.
D. would reduce tax collections, thereby stimulating aggregate demand.
B. essentially eliminates the use of fiscal policy for stabilizing the economy.
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When considering the socially optimal amount of pollution, the benevolent social planner takes into account any laws regarding pollution
Indicate whether the statement is true or false
In a market economy, uncertain levels of inflation
A) make prices less useful as signals for resource allocation. B) prompt firms to enter into fewer short-term contracts, and more long-term contracts, with suppliers. C) balance out income redistribution in the long run. D) are more beneficial to lenders than to borrowers, as lenders have a tendency to overestimate the expected inflation rate.
Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
a. expansionary policies. b. fiscal dividends. c. output policies. d. laissez-faire policies.
The Invisible Hand Principle suggests that
a. market prices direct individuals to produce more goods. b. individuals pursuing their own interests detract from the economic well-being of society. c. there should be stronger governmental initiatives to ensure cooperation for the betterment of society. d. market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society.