Contractionary fiscal policy is deliberate government action to influence aggregate demand and the level of real GDP through:

A. expanding and contracting the money supply.
B. encouraging business to expand or contract investment.
C. regulating net exports.
D. decreasing government spending or increasing taxes.


Answer: D

Economics

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Budget cuts which lead to more lax protection of our borders will affect the labor market in California. It will cause a(n) ___________ in labor supply, resulting in __________.

A. decrease; higher wages B. increase; higher wages C. increase; lower wages D. decrease; lower wages

Economics

Provide economic explanations of the following puzzling behaviors.

(i) Many risk-averse people choose to buy lottery tickets, even when the lottery does not offer fair odds. (ii) Many furniture stores, instead of simply lowering their prices, offer buyers 6 months interest-free with no money down and no monthly payment. (iii) Although they are not required to do so, plumbers, auto mechanics, and other repair services give customers a 30-day warranty on the parts and labor.

Economics

Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect:

a. The price to fall and output to rise b. The price to fall and output to fall c. The price to rise and output to rise d. The price to rise and output to fall

Economics

Refer to Scenario 7.2 below to answer the question(s) that follow. SCENARIO 7.2: You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of $100,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a return of $20,000 a year. Refer to Scenario 7.2. Your economic profit last year was

A. -$40,000. B. -$10,000. C. $10,000. D. $30,000.

Economics