During a severe recession, the government decides to lower its tax rates to give consumers relief, and allow them to pay less in taxes. This is an example of:
A. an automatic stabilizer.
B. expansionary fiscal policy.
C. contractionary fiscal policy.
D. discretionary fiscal policy.
Answer: D
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If the Fed's policies aim to increase aggregate demand, the Fed must fear
A) recession. B) a supply shock that increases aggregate supply. C) a supply shock that decreases potential GDP. D) stagflation. E) inflation.
The marginal revenue curve for a monopolist is always below the demand curve.
Answer the following statement true (T) or false (F)
If the amount of lemonade purchased and the outdoor temperature are directly related, then
A. when temperature rises, the amount of lemonade purchased rises. B. a graph with this relationship would be negatively sloped. C. sellers of lemonade hope for cooler temperatures. D. the slope of the line reflecting this relationship will be 0.
The major distinguishing characteristic of oligopoly is that
A. firms can influence the price of their product. B. entry into the industry easy. C. firms produce differentiated products. D. firms are interdependent.