Which of the following is a key difference between the economic activities of government and those of private firms?
A. Private firms face the constraint of scarcity; government does not.
B. Government focuses primarily on equity; private firms focus only on efficiency.
C. Private economic activities create externalities; government activities do not.
D. Government has the legal right to force people to do things; private firms do not.
Answer: D
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Which of the following is a limitation of discretionary fiscal policy?
i. law-making lags ii. estimating potential GDP iii. income gap A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
The trade-off between current consumption and the production of capital goods is also a trade-off between
A) the future cost for capital goods and future cost of consumption goods. B) having fewer needs and more wants in the future. C) satisfying the needs of the poor and the wants of the wealthy. D) current consumption and future consumption.
A macroeconomic shortage occurs when consumers begin to save more money and consume less
a. True b. False Indicate whether the statement is true or false
Which of the following hypotheses is a plausible explanation for why U.S. households save so little?
A. Government assistance to low-income U.S. households has increased the demonstration effects on spending by the poor. B. Most Americans already own homes and, therefore, have less need for life-cycle saving. C. Government assistance to the elderly has reduced the need for life-cycling saving. D. The highly developed financial markets in the U.S. have reduced the need for precautionary saving by Americans.