A difficulty with effective fiscal policy is the:
A. guess as to what potential GDP is.
B. reality of time lags.
C. lack of relevant information needed to decide the magnitude of change.
D. All of these are true.
Answer: D
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Employing an additional 1 billion hours of labor increases real GDP by $12 billion. Employing another 1 billion hours beyond the first 1 billion increases real GDP by $11 billion
Hence we can conclude from this information that as employment increases, real GDP A) increases at an increasing rate. B) decreases at an increasing rate. C) decreases at a decreasing rate. D) increases at a decreasing rate. E) falls from $12 billion to $11 billion as more workers are hired.
A camera manufacturer will sell its cameras only to retailers who agree to buy its brand of film. This is an example of
a. price discrimination b. exclusive dealing c. a tying contract d. interlocking directorates e. a trust
Recognition lag is the time it takes for policymakers to recognize the existence of an economic expansion or a recession
a. True b. False Indicate whether the statement is true or false
The marginal tax rate is equal to the
A) total amount of a person's tax payment divided by the total amount of the person's taxable income. B) total amount of a person's tax payment divided by the change in the person's taxable income. C) change in the person's tax payment divided by the total amount of the person's taxable income. D) change in the person's tax payment divided by the change in the person's taxable income.