Fiscal policy involves changes in government spending and taxes, but not regulation of prices or production.
Answer the following statement true (T) or false (F)
True
Fiscal policy is the use of government taxes and spending to alter macroeconomic outcomes. Regulation of prices or production is not included in fiscal policy.
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Why does a monopsony increase employment when faced with an effective minimum wage law?
What will be an ideal response?
Increases in productivity per person lead to increases in per capita income, which we call:
A. economic growth. B. the GDP deflator. C. the producer productivity index. D. GDP per capita.
If Nike and Adidas are faced with the game in the figure shown, we can predict:
A. an outcome that is good for society and less than ideal for the companies.
B. an outcome that is less than ideal for society, but optimal for the companies.
C. that both will follow their dominant strategy and society will lose.
D. None of these is likely to happen.
The advantage of a system of fixed exchange rates over one where exchange rates are flexible is that
A. the government gains more control over the economy. B. floating exchange rates impose risks on importers and exporters from unpredictable exchange rates. C. exchange controls become unnecessary. D. fiscal and monetary policy can focus more on domestic conditions.