Fiscal policy refers to the idea that aggregate demand is affected by changes in
a. the money supply.
b. government spending and taxes.
c. trade policy.
d. All of the above are correct.
b
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Assume that Figure 4-16 shows the supply of steak. An increase in the price of pork will change the supply from
a. S1to S2. b. S2to S1. c. S2to S3. d. S1to S3.
When a negative externality exists, _______________________ and thus _______________ intervention may be needed to achieve efficiency.
A. external costs are necessarily greater than private costs; government B. social costs equal private costs; no government C. social costs are less than private costs; government D. social costs are greater than private costs; government E. none of the above
All of the following are possible funding sources for the government EXCEPT
A) user charges. B) taxes. C) interest income collected from government bonds. D) borrowing.
A tax rate increase always leads to an increase in tax revenue for the government.
Indicate whether the statement is true or false.