Which one of the following is an example of discretionary fiscal policy used to correct a recessionary gap?
A) a tax decrease passed into law by Congress
B) an increase in the money supply by the Federal Reserve
C) a decrease in government expenditures approved by Congress
D) an agreement among major banks to raise interest rates
A
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If there is unemployment in an economy, then the
A) economy is operating at an unattainable point. B) production possibilities frontier will shift inwards. C) production possibilities frontier must be bowed inward. D) economy is producing at a point inside the production possibilities frontier. E) production possibilities frontier will shift outwards.
In Coase's confectioner and doctor example, what was the externality?
a. The doctor building his office so close to the confectioner. b. The vibrations generated by the confectioner's production process. c. The large number of people entering the confectioner's factory thinking it was the doctor's office. d. The screams of the doctor's patients disrupted factory workers from performing their duties.
A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if
a. demand is elastic b. supply is inelastic c. demand falls d. demand is inelastic e. supply is unit elastic
U.S. GDP increased from $12.5 trillion in 2005 to $14 trillion in 2009. This means that:
A. people in the U.S. produced more goods and services in 2009 than in 2005. B. the prices of all goods and services were higher in 2009 than in 2005. C. Either of these could be true. D. Both of these must be true.