Explain and give some examples of governmental policy problems
What will be an ideal response?
Steady nominal prices give government the power to raise output when it is low. It can also cause them to create a tool that can be used for an economic boom. An example is just before an election. The temptation can be a problem when workers and companies expect it in advance. This will cause a rise in wage demand and prices in the expected expansionary policies. An inflation bias causing high inflation but no average gains in output is also a problem. Others are the difficulty in showing the sources or time of economic changes, and time lags in implementing policies. Impact on the government budget by fiscal policy also causes problems by the way of a tax cut; increase in spending may lead to a government budget deficit that must sooner or later be closed by a fiscal reversal. Policy problem that seem to act quickly have actually a lag time with varying lengths.
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Hyperinflation is defined as periods of
A) inflation over 25 percent per year B) negative price changes. C) low inflation. D) inflation over 50 percent per month. E) inflation under 10 percent per year.
A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65 . At what price would the firm consider shutting down in the short run?
a. $10 b. $25 c. $65 d. $70
TANF sets a lifetime cap for benefits at 10 years
a. True b. False Indicate whether the statement is true or false
Refer to the given data. Assume that before specialization and trade Landia was producing combination C and Scandia was producing combination B. If these two nations now specialize completely based on comparative advantage, the total gains from specialization and trade would be:
Answer the question on the basis of the following production possibilities data for Landia and Scandia:
A. 8 fish and 2 chips.
B. 10 fish and 4 chips.
C. 0 fish and 8 chips.
D. 4 fish and 6 chips.