When the economy fluctuates around its long-run aggregate supply:
A. it is called the business cycle.
B. the value of currency becomes unstable.
C. we must be in a recession.
D. the economy is in a state of chaos.
Answer: A
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Since 2000, the U.S. government has generally had a government budget ________ and so the national debt has ________
A) surplus; decreased B) surplus; increased C) deficit; decreased D) deficit; increased E) deficit; not changed
Which of the following statements is false?
A) A government with the power to tax can solve the free rider problem. B) A government with the power to tax can set a tax greater than the MEC when trying to change the market outcome into the efficient outcome. C) A government with the power to subsidize can set a subsidy greater than the MEB when trying to change the market outcome into the efficient outcome. D) Government can remove individuals from a prisoner's dilemma setting by changing the payoffs in the payoff matrix. E) none of the above
If the Federal Reserve wished to engage in contractionary monetary policy, it could
A. purchase government debt. B. raise the federal funds rate target. C. lower the reserve ratio. D. lower the primary credit rate.
Which of the following items is not one of the key functions of prices in the market system?
A) coordination B) measuring desire C) profit D) measuring scarcity