When analyzing the impact of government consumption and taxes in an open economy, we assume that:
a. the reasons for changing fiscal policy are not important.
b. government deficits are a problem for the domestic and international economy.
c. governments always have a balanced budget.
d. governments often do not coordinate their tax and spending policies with those of other nations.
Ans: a. the reasons for changing fiscal policy are not important.
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Which of the following is an important difference between police protection and food and explains why one is commonly provided by government while the other is not?
A) Food can easily be withheld from people who don't pay for it. B) Food is not a traditional concern of government. C) Food is too vital to be entrusted to government. D) Food producers form a powerful political lobby. E) Food provided through government would be inefficient.
Which of the following is not an advantage of starting a new business as a corporation?
A) separation of ownership and business liability B) possibility of double taxation C) ability to share risks D) enhanced ability to raise funds
Market failure occurs when
A) a good is too expensive for the market to provide. B) an unrestrained market economy leads to too few or too many resources going to a specific economic activity. C) one good is superior to another and drives it out of the market. D) the stock market experiences a very large loss.
One of the reasons for the growth performance of free market economies is firms' use of innovation to compete with one another
a. True b. False Indicate whether the statement is true or false