According to the rational choice model, cash grants are preferred to food stamps because
A. food is the most essential commodity.
B. they enhance consumer choice.
C. cash grants allow consumers to reach lower indifference curves.
D. food would be cheaper to buy with cash.
Answer: B
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For each of the following situations, choose a fiscal policy and explain how it could be used to correct the economic problem
a. Real GDP is below potential GDP following a financial market crisis. b. A positive demand shock increases aggregate expenditure beyond the full employment level and leads to fears of rising inflation. c. The economy is in a recession due to rising defaults on mortgages following the bursting of a housing bubble.
A firm's short-run average cost curve is U-shaped. Which of these conclusions can be reached regarding the firm's returns to scale?
A) The firm experiences increasing returns to scale. B) The firm experiences increasing, constant, and decreasing returns in that order. C) The firm experiences first decreasing, then increasing returns to scale. D) The short-run average cost curve reveals nothing regarding returns to scale.
To determine inflation over time, a basket of goods and services is used to track _________ levels.
a. cost b. price c. consumption d. production
Answer the following statements true (T) or false (F)
1) There is a consensus among economists that the amount of resources allocated to the health care industry is optimal. 2) Some employers have reacted to rising health care costs by hiring more part-time and temporary workers. 3) About three-fourths of all health care costs are paid out of pocket by patients. 4) In 2011, some 49 million Americans did not have health insurance.