Automatic stabilization refers to
A) the policy of lowering tax rates during a recession.
B) the policy of increasing autonomous G during a recession.
C) the effect of income taxes in lowering the multiplier effect of changes in autonomous planned spending.
D) all of the above.
C
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Suppose a U.S. firm purchases some English china. The china costs 1,000 British pounds. At the exchange rate of $1. 45 = 1 pound, the dollar price of the china is
A. $1,450. B. $250. C. $690. D. $2,000.
Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is $10,000. However, Richland's real GDP per person is growing at 1 percent per year, and Poorland's real GDP per person is growing at 3 percent per year. After 50 years, real GDP per person in Richland minus real GDP in Poorland is:
A. positive but less than $10,000. B. zero. C. negative. D. positive and greater than $10,000.
After the September 11, 2001 terrorist attacks, non-defense, non-homeland security government spending
A. increased, but at a rate almost exactly the same as it had before the attacks. B. increased at a rate much faster than it had before the attacks. C. was cut. D. increased, but at a rate much slower than it had before the attacks.
Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf ball production, Kevin has marginal costs equal to $2. If the market price of golf balls is $1, Kevin should:
A. decrease the level of golf ball production. B. continue producing the current level of production. C. increase the production of golf balls. D. raise the price of its golf balls.