The economy will not reach and maintain its goals of full employment and price stability unless the economy is
A. Below full employment and the price level is stable.
B. Above full employment and the price level is stable.
C. At full employment and the price level is stable.
D. None of the choices are correct.
Answer: C
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Automatic stabilizers include
A) changes in induced taxes and changes in needs-tested spending. B) increases or decreases of tax rates and changes in needs-tested spending. C) changes in induced taxes and changes in discretionary spending. D) changes in discretionary spending and changes in needs-tested spending. E) changes in the federal funds interest rate brought about by Fed policy.
Why do firms in a monopolistically competitive industry advertise?
What will be an ideal response?
By holding highly liquid assets to guard against sudden large withdrawals, banks: a. sacrifice safety
b. sacrifice profitability. c. increase profitability. d. diversify their portfolio. e. earn more interest than they could on business loans.
Negative externalities, such as air pollution, pose a social problem because they
a. benefit buyers but not sellers b. are intended and are market derived c. have a positive value for those who create them d. have a negative value for those who create them e. are difficult to internalize