One purpose of discretionary fiscal policy is to
A. increase government spending during a recession.
B. reduce inflation during an expansion.
C. reduce inflation during a recession.
D. increase taxes during an expansion.
Answer: B
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A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firm's total revenue?
A) $23 B) $150 C) $1,000 D) $1,150 E) $20
To the corporation, bonds are riskier than stocks because
A. interest rates fluctuate. B. bond interest requires that firms make a fixed payment. C. investors prefer stocks to bonds. D. speculators manipulate bonds more than stocks.
To reassure investors who were unwilling to buy mortgages in the secondary market, the U.S. Congress used two government sponsored enterprises, ________, to sell bonds to investors and use the funds to purchase mortgages from banks
A) the Fed and the Treasury Department B) Fannie Mae and Freddie Mac C) the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) D) ACORN and the Federal Housing Administration (FHA)
An example of an automatic stabilizer is
A. changing the tax laws to increase the marginal tax rates. B. the interest the government pays on loans. C. the indexation of social security benefits to the consumer price index. D. the food stamp program.