When recessions occur, advocates of small government should recommend
a. reductions in the number of federal employees.
b. reductions in transfer payments.
c. reductions in taxes.
d. increases in transfer payments and government spending.
c
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Refer to the scenario above. Which of the following statements is true of the model?
A) The model predicts that two additional years of education is likely to increase future earnings by 60 percent. B) The prediction of the model can be applied to unlimited years of additional education. C) The predictions of this model cannot be tested empirically. D) The prediction of the model is accurate and will hold for all individuals.
Suppose that you own a house. What is the opportunity cost of living in the house?
A) The opportunity cost is the rent you could have received from a tenant if you didn't live there. B) There is no opportunity cost unless you could set up a business in the house. C) There is no opportunity cost because you own the house. D) The opportunity cost is the cost of your monthly mortgage payment plus bills.
From time to time, the Federal Reserve buys back government bonds from the private sector through a process called
A) voluntary redemption procedures. B) backflip bond investments. C) open market purchases. D) bond recall procedures.
Which of the following statements correctly differentiates between positive and normative economics?
A) Positive economics is descriptive, whereas normative economics is advisory. B) Positive economics describes what people ought to do, whereas normative economics describes what people actually do. C) Positive economics is based on judgments, whereas normative economics is not. D) Positive economics can only be applied to microeconomics, whereas normative economics can be applied to both microeconomics and macroeconomics.