The goal of expansionary fiscal policy is to increase
A. aggregate supply.
B. real GDP.
C. unemployment.
D. the price level.
Answer: B
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A cartel most likely forms in
A) an oligopolistic market. B) a perfectly competitive market. C) a monopolistically competitive market. D) a heavily regulated industry.
an increase in marginal tax rates will
What will be an ideal response?
If firms sharply increase the number of investment projects undertaken when interest rates fall and sharply reduce the number of investment projects undertaken when interest rates increase, then, ignoring the crowding out effect,
A) expansionary fiscal policy will be very effective. B) expansionary monetary policy will be very effective. C) contractionary fiscal policy will be very effective. D) contractionary monetary policy will not be very effective.
To test their theories, economists usually have to
A) set up careful laboratory experiments with all variables controlled. B) first examine theory and what has happened in the past in the real world. C) use only models that have a proven record of success. D) anticipate every factor with 100 percent accuracy.