Which of the following is an example of an automatic stabilizer?
What will be an ideal response?
Revenues from the corporate income tax increase sharply during a business boom but decline substantially during a recession, even though no new tax legislation has been enacted.
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Consider a firm that uses two inputs, labor and capital, to produce its output. Assume labor is measured on the horizontal axis and capital on the vertical axis
Which of the following best explains why the marginal rate of technical substitution decreases in absolute value as we move down an isoquant? A) The law of imperfect substitutability: labor and capital are not perfect substitutes; therefore, a firm must replace decreases in capital with increases in labor. B) The law of diminishing returns: for a given decline in capital, decreasing amounts of labor are required to produce the same level of output. C) The law of increasing marginal opportunity cost: if a firm uses less and less capital it must use more and more labor, which drives up the cost of labor. D) The law of diminishing returns: for a given decline in capital, increasing amounts of labor are required to produce the same level of output.
Using the IS-MP model, explain what happens to output and the real interest rate when the IS curve shifts to the right and when it shifts to the left, and when the MP curve shifts up and when it shifts down?
What will be an ideal response?
What is the motivation behind the cost-control features of managed care?
a. To influence the way physicians practice medicine by changing the financial incentive structure of medical care delivery b. To ensure access to specialty care through general practitioner gatekeepers c. To shift the financial risk onto patients d. To create competition by providing patients with a wide range of providers e. To eliminate all the guesswork from diagnoses by establishing practice guidelines
When an international financial crisis occurs
A. financial flows can slow to a trickle, influencing economic growth. B. there are no serious financial effects that last more than a few months. C. investors sell off bonds and restrict loans as a mechanism to help the country recover. D. financial lenders protect their investments by pouring money into the ailing country.