Aggregate output and the interest rate are ________ related to government spending and are ________ related to taxes
A) positively; positively
B) positively; negatively
C) negatively; positively
D) negatively; negatively
B
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For a firm in a perfectly competitive industry
A) the demand curve is unitary elastic throughout. B) marginal revenue and product price are equal at every level of output. C) the price elasticity of demand is zero. D) more output can be sold only if the firm unilaterally lowers its product price.
Most people buy insurance because they
a. are risk lovers b. enjoy the gamble c. are risk neutral d. want to avoid gambles
Core inflation is measured because the prices of:
A. food and energy costs fluctuate frequently and can distort actual changes in the cost of living. B. retail consumption items fluctuate frequently and can distort actual changes in the cost of living. C. nondurable goods fluctuate more frequently than the prices of durable goods; therefore, removing them from the basket prevents potential distortion. D. durable goods fluctuate more frequently than the prices of nondurable goods; therefore, removing them from the basket prevents potential distortion.
During a recession, the political incentive structure will encourage politicians to
a. undertake sound economic policies that are consistent with stability and growth. b. adopt any policies, even bad ones, that give the appearance of taking action. c. undertake policies that promote long-term economic growth rather than short-term benefits. d. do nothing and let the recession run its course.