An example of automatic stabilizers is
A. taxes falling in an expansion.
B. taxes rising in a recession.
C. government spending rising in a recession.
D. all of the above
Answer: C
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If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is
A) relatively elastic. B) relatively inelastic. C) perfectly elastic. D) unit elastic.
When choosing the right amount of a public good to supply, the government often:
A. guesses, because people have an incentive to overstate a good's value. B. provides too much, because people have an incentive to understate a good's value. C. provides too little, because people have an incentive to overstate a good's value. D. fails to provide it, because people have an incentive to understate a good's value.
The payoff matrix below shows the payoffs (in millions of dollars) for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital. 
Firm A's dominant strategy is to ________, and Firm B's dominant strategy is to ________.
A. not invest; invest B. not invest; not invest C. invest; invest D. invest; not invest
A change in the reserve requirement is used infrequently by the Fed because it:
A. is disruptive to the banking system. B. does not influence the money supply. C. does not affect bank reserves. D. does not affect the money multiplier.