Automatic stablizers
A. is more effective in influencing real GDP than discretionary fiscal policy at times of a recession.
B. are more effective in influencing real GDP at normal times than at times of a recession.
C. is probably not very effective in influencing real GDP during a recession.
D. works well because there are no policy lag problems in influencing real GDP.
Answer: A
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Carefully distinguish between an economic theory and economic model.
What will be an ideal response?
A production possibilities frontier will be bowed out if
a. there is scarcity b. resources are used efficiently c. production of one good involves an opportunity cost d. resources are not perfectly adaptable to making each good e. technology is improving
Economists define capital as the
a. accumulation of goods produced in the past that are being used in the present to produce new goods and services. b. goods and services that are most affected by changes in technology. c. factors of production that can be rented by firms. d. factors of production that can be purchased by firms.
Three landscapers, Allen, Betty, and Christina, are visiting the lawn and garden supply store. Allen is choosing between a mower with a 40-inch blade and a mower with a 28- inch blade. Betty is picking up her mower, which was in for scheduled maintenance. Christina is putting up a For Sale sign advertising her equipment and list of customers. Who is operating in the short run?
a. Allen and Betty b. Betty and Christina c. Allen only d. Betty only e. Christina only