Scarcity is caused by
A. a company's slow production speed.
B. shortages.
C. an individual's budget that is insufficient to cover the expenses of certain goods or services.
D. unlimited wants running up against limited economic resources.
Answer: D
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A situation in which the government cannot implement an optimal tax policy because the policy is inconsistent with the government's incentives over time is known
A. government tax problem. B. time inconsistency of optimal policy. C. the double-counting game. D. Wagner's Law.
Monetarists view the use of monetary policy to fine-tune the economy as
A) unnecessary because the private sector is inherently stable. B) always inflationary. C) less predictable than fiscal policy. D) impossible because the Fed does not have the tools to control the money supply.
When an economy operates at its long-run potential output level,
a. aggregate demand will exceed aggregate supply in the goods and services market. b. unemployment will decline to an abnormally low rate that cannot be sustained in the long run. c. the actual rate of unemployment will exceed the natural rate of unemployment. d. the natural and actual rates of unemployment will be equal.
Making optimal decisions "at the margin" requires
A) making decisions according to one's whims and fancies. B) making consistently irrational decisions. C) weighing the costs and benefits of a decision before deciding if it should be pursued. D) making borderline decisions.