Which of the following best illustrates the use of discretionary countercyclical fiscal policy?
a. Congress provides $90 billion in relief aid for hurricane victims.
b. Congress appropriates $50 billion to help the needy, and the appropriation is financed by a tax on wealth.
c. Income tax receipts are smaller because of a decline in real GDP during a recession.
d. Congress passes a bill authorizing $100 billion in additional spending when it receives news of a deepening recession.
D
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If your demand for a good is ________, then a 1 percent fall in its price will lead you to ________ your expenditures on the good
A) inelastic; increase B) inelastic; decrease C) elastic; increase D) elastic; decrease
When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell
A) any positive output the entrepreneur decides upon because all of it can be sold. B) nothing at all; the firm shuts down. C) the output where average total cost equals price. D) the output where marginal revenue equals marginal cost.
Figure 15-1
Figure 15-1 describes conditions in the monopolized weezil industry. In the absence of government intervention, the monopolist will produce an output equal to
A. W. B. X. C. Y. D. Z.
Classical economists believe that the economy tends naturally toward
a. full employment and zero inflation equilibrium without government interference b. zero unemployment and zero inflation as long as the Federal Reserve keeps interest rates low c. high unemployment unless the Federal Reserve constantly adjusts the money supply d. high inflation unless the government curbs its spending habits and cuts tax rates to spur economic activity e. monetary equilibrium as long as money velocity is less than one