If the MPC in an economy is 0.8, government could close a recessionary expenditure gap of $100 billion by cutting taxes by:
A. $80 billion
B. $100 billion
C. $125 billion
D. $200 billion
C. $125 billion
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Which of the following is an example of an automatic stabilizer?
A) Congress increases the tax rate during an expansion. B) Congress authorizes spending increases during a recession. C) More unemployment benefits are paid during a recession. D) Welfare payments decrease during a recession.
The law of demand is illustrated by a demand curve that is:
A. horizontal. B. downward-sloping. C. vertical. D. upward-sloping.
The trade-off between the present and future consumption is measured by
A) the money cost of both the present and future consumption. B) the foregone present consumption. C) the difference between the money price of future goods and the money cost of producing them. D) the difference between the money price of present goods and the money cost of producing them.
Economies of scale in production act as a source of:
A) legal market power. B) natural market power. C) restricted market power. D) regulated market power.