The view that the government budget should always be balanced except in wartime refers to:
A. the Ricardian equivalence.
B. fiscal policy.
C. public finance.
D. sound finance.
Answer: D
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If the U.S. dollar becomes weaker in international foreign exchange markets, imported goods become more expensive. One result of this is that
A) domestic employment rises. B) net exports increase. C) real Gross Domestic Product (GDP) increases. D) net exports decrease.
The figure above shows the market for milk. When the efficient quantity of milk is produced, the marginal social benefit from the last gallon is
A) $2.00. B) $2.50. C) $3.00. D) $3.50.
If government regulators want a natural monopolist to earn only zero economic profit, they will set price equal to:
A. average total cost (ATC). B. marginal cost (MC). C. average fixed cost (AFC). D. average variable cost (AVC).
The law of diminishing returns results in:
A. an eventually falling marginal cost curve. B. a total product curve that eventually increases at a decreasing rate. C. an eventually rising marginal product curve. D. a total product curve that rises indefinitely.