Which of the following statements about fiscal policy is correct?
a. Fiscal policy can help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment.
b. Fiscal policy cannot help an economy produce at an output level above potential GDP without causing deflation.
c. Fiscal policy cannot help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment.
d. Fiscal policy can help an economy produce at an output level above potential GDP without causing inflation.
a. Fiscal policy can help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment.
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The M2 measure of the money supply includes
a. M1 plus credit cards. b. M1 plus savings deposits, small time deposits, and money market funds. c. M1 plus Eurodollars. d. M1 minus Eurodollars.
According to the marginal approach to profit maximization,
a. firms should equate total revenue and marginal cost when choosing the optimal output level b. firms should take any action that increases revenue more than costs c. economic profit is zero in the long run d. marginal cost declines until it reaches marginal revenue at the profit-maximizing output level e. marginal costs eventually diminish as more output is produced
Which of the following is a function that is performed by the Federal Reserve?
a) To clear checks. b) To keep inflation high. c) To keep employment high. d) To keep interest rates low.
Once a product becomes established, network externalities may create ________ costs that make consumers reluctant to buy a new product with better technology
A) external B) implicit C) switching D) marginal