Discretionary fiscal policy refers to changes in taxes or spending that occur in response to changes in the economy.
Answer the following statement true (T) or false (F)
False
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Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay constant. The decrease in income will result in a:
A. Shift of the budget line inward to the left B. Shift of the budget line outward to the right C. A decrease in the slope of the budget line D. An increase in the slope of the budget line
A firm in a perfectly competitive market has no control over price because
A. every firm's product is a perfect substitute for every other firm's product. B. there is free entry and exit from the industry. C. the market demand for products produced in perfectly competitive industries is perfectly elastic. D. the government imposes price ceilings on the products produced in perfectly competitive industries.
If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?
a. abundant natural resources b. substantial aid from rich countries c. central planning and a high level of government expenditures d. institutions and policies that encourage productive activities
Give an example of a scenario that combines positive analysis and normative analysis.
What will be an ideal response?