According to new classical economists, the most appropriate policy during a recession would be for the government to
a. increase the minimum wage.
b. impose wage and price controls.
c. cut taxes and increase the budget deficit.
d. do nothing.
D
You might also like to view...
If a government chooses to finance a budget deficit by borrowing and the expected inflation rate does not change, this will cause the real interest rate to ________ and the nominal interest rate to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
If a firm is selling a quantity that is NOT on its best-response curve it
A) will go out of business. B) is in a Nash equilibrium. C) will want to change its behavior. D) is operating in a duopoly.
What is the key feature shared by all oligopoly markets?
a. A large number of sellers. b. Mutual interdependence. c. Product differentiation. d. Easy entry and exit.
A radio story reported a study on the makes and models of cars that were observed going through intersections in the Washington, D.C. area without stopping at the stop signs. According to the story, Volvos were heavily overrepresented; the fraction of cars running stop signs that were Volvos was much greater than the fraction of Volvos in the total population of cars in the D.C. area. This is
initially surprising because Volvo has built a reputation as an especially safe car that appeals to sensible, safety-conscious drivers. How is this observation best explained? a. Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs. b. Volvo drivers are not willing to take risks that they would take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs. c. Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo reduces the propensity to run stop signs. d. Volvo drivers are willing to take risks that they would not take in another, less safe car. Driving a Volvo leads to a propensity to run stop signs.