Some economists argue that policymakers can use monetary and fiscal policy to reduce the severity of economic fluctuations. What are some things policymakers can do to boost the economy when aggregate demand is inadequate to ensure full employment?
Policymakers can increase government spending, cut taxes, and expand the money supply to boost the economy.
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A necessary condition for exchange rate stability where the sum of the elasticity of import demand and the elasticity of export supply must be greater than one is known as
A) the Marshall Lerner condition. B) the elasticities rule. C) the elasticities approach. D) the exchange rate condition.
Suppose New York City passes a local "big gulp" tax that taxes carbonated beverages larger than 20 ounces if they contain sugar or high fructose corn syrup. If the revenue from the "big gulp" tax is earmarked for diabetes research, the "big gulp" tax may be justified
a. on the basis of the ability-to-pay principle. b. because it is an example of a lump-sum tax and thus is the most efficient tax. c. on the basis of the benefits principle. d. because it is an example of a progressive tax and thus is the most equitable tax.
Which of the following is a characteristic of a natural monopoly?
a. Fixed costs are typically a small portion of total costs. b. Average total cost declines over large regions of output. c. The product sold is a natural resource such as diamonds or water. d. All of the above are correct.
Which of the following is an important factor affecting economic growth?
A. the level of prices B. the rate of saving C. exchange rates D. the rate of interest