The political incentive structure tends to
a. encourage a balanced budget regardless of economic conditions.
b. discourage budget deficits during recessions.
c. encourage budget surpluses during both recessions and expansions.
d. encourage budget deficits during both recessions and expansions.
D
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Reducing prices below cost in order to eliminate competitors (with the intention of later raising prices to recoup all losses) is
A) an empirical impossibility in a free society. B) called induced competition. C) called predatory price cutting. D) increasingly common in the American economy.
Which of the following would result in a trade surplus for the United States?
A) Exports of goods = $550 billion Imports of goods = $575 billion Exports of services = $275 billion Imports of services = $300 billion B) Exports of goods = $725 billion Imports of goods = $790 billion Exports of services = $350 billion Imports of services = $260 billion C) Exports of goods = $625 billion Imports of goods = $625 billion Exports of services = $300 billion Imports of services = $375 billion D) None of the above will result in a trade surplus.
If technological advance is crucial to growth, then countries must increase their spending most rapidly on
a. investment b. education c. research and development d. basic human needs e. all of the above
Critics of supply-side economics argue that
a. tax cuts do not affect supply, only demand. b. supply-siders exaggerate the effects of tax cuts. c. incentives have no effect on behavior. d. the goals of supply-siders are not supported by most economists.