The government is able to alter the outcome of the three basic economic questions (what? how? and for whom?) by ______________, _________________, and ___________.
Fill in the blank(s) with the appropriate word(s).
taxing; spending; regulating (any order)
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According to the segmented markets theory of the term structure
A) bonds of one maturity are close substitutes for bonds of other maturities, therefore, interest rates on bonds of different maturities move together over time. B) the interest rate for each maturity bond is determined by supply and demand for that maturity bond. C) investors' strong preferences for short-term relative to long-term bonds explains why yield curves typically slope downward. D) because of the positive term premium, the yield curve will not be observed to be downward-sloping.
Economic variables that generally turn down after a recession begins and turn back up after the recovery starts are called:
A) leading indicators. B) coincident indicators. C) lagging indicators. D) none of the above.
Figure 7-4
Following a rash of airplane bombs, the airlines have been forced to increase security at a cost of $30 million per year. The number of inspectors and machines does not vary with the number of passengers; the airlines must have sufficient staff available to handle the full-capacity load. Which graph in Figure 7-4 best illustrates the impact of the security expenditures?
A. 1 B. 2 C. 3 D. 4
The notion that when the price of an input falls, a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as
a. the output effect. b. the substitution effect. c. the input effect. d. the cost effect.