What do critics of social regulation need to remember about government?
What will be an ideal response?
The major point to remember is that less government is not always better government. Social regulation if applied carefully has the potential to improve economic efficiency and overall societal welfare. Such regulation can reduce the hard edges of a market economy by making the workplace safer, drugs safer, eliminating discriminatory work practices, and other action. This regulation can help maintain political support for a market economy without undermining the benefits of competition.
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The government wishes to close an inflationary gap by reducing real GDP by $400 billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the following policy prescriptions would reduce the inflationary gap by $400 billion?
a. Decreasing government spending by $400 billion and increasing taxes by $400 billion. b. Decreasing government spending by $160 billion and decreasing taxes by $100 billion. c. Decreasing government spending by $40 billion and decreasing taxes by $40 billion. d. Decreasing government spending by $80 billion and keeping taxes the same. e. Doing absolutely nothing to the economy.
An increase in the money supply causes output to rise in the long run
a. True b. False Indicate whether the statement is true or false
The two key factors that cause labor productivity to increase over time are:
A. the quality of labor per hour worked the level of technology B. the quantity of capital per hour worked and the level of technology C. better environmental standards and stricter labor laws D. the decline in unionization and slacking of labor laws
Based on this figure, if the krone exchange rate is fixed at $0.09 dollars per krone, the krone is ________. 
A. revalued B. overvalued C. devalued D. undervalued