Which of the following statements would appeal to someone who favors an expanded public sector as the basis of expansionary fiscal policy?
A. “The government isn’t the solution; it’s the problem.”
B. “The government that governs least governs best.”
C. “The American people want national defense; they want laws to be enforced; they want federal support for education and environmental protection, and they want transfer payments for the elderly and unemployed.”
D. “If you ever got anything good out of the government you can be sure that some rich so-and-so got more.”
Answer: C
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Which of the following is a key difference between firms in a perfectly competitive industry and firms in a monopolistically competitive industry?
a) A monopolistically competitive firm does not face entry from other firms. b) A monopolistically competitive firm does not have the exact same product as other firms. c) A monopolistically competitive firm does not choose a level of output where marginal cost is equal to marginal revenue. d) A monopolistically competitive industry does not have a large number of sellers.
In general, the deadweight loss associated with an import tariff or quota becomes relatively larger when:
A) supply and demand are inelastic. B) supply is elastic and demand is inelastic. C) demand is elastic and supply is inelastic. D) supply and demand are elastic.
The defensive and offensive actions of the Fed differ because offensive actions are designed to:
A. change the current monetary policy while defensive actions are designed to reinforce the current monetary policy. B. reinforce the current monetary policy while defensive actions are designed to change the current monetary policy. C. tighten monetary policy and defensive actions are designed to ease monetary policy. D. ease monetary policy and defensive actions are designed to tighten monetary policy.
When investors follow a "herd instinct," they make decisions:
A. based on the sound logic of a group, rather than the individual. B. based on emotion, not objective information. C. based on hearsay, not objective information. D. as a group, inflating the prices of goods somewhat arbitrarily.