Fiscal policy refers to the:
A. fact that equal increases in government spending and taxation will be contractionary.
B. manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.
C. manipulation of government spending and taxes to achieve greater equality in the distribution of income.
D. altering of the interest rate to change aggregate demand.
Answer: B
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What will be an ideal response?
A compensated increase in the price of a good:
A. causes the consumer to buy more of the good if the income effect is larger than the substitution effect. B. causes the consumer to buy more of the good if the income effect is smaller than the substitution effect. C. always causes the consumer to buy more of that good. D. always causes the consumer to buy less of that good.
The inflation rate can be calculated as the percentage change in:
A. real GDP. B. the CPI. C. the exchange rate. D. nominal GDP.
The difference between the accountant's and the economist's measurement of cost is equal to implicit costs.
Answer the following statement true (T) or false (F)