When total expenditures exceed the economy's potential GDP, the proper fiscal policy is to
a. increase transfer payments to the poor and elderly.
b. cut personal income tax rates.
c. decrease government purchases.
d. increase purchasing power.
c
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Although the subprime mortgage market problem began in the United States, the first indication of the seriousness of the crisis began in
A) Europe. B) Australia. C) China. D) South America.
Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is
A. positive. B. negative. C. less than one because neither is a luxury. D. more than one because both are luxuries.
A search good is a product
A) with qualities that consumers lack the expertise to assess without assistance. B) that emphasizes the features of its product. C) with characteristics that enable an individual to evaluate the product's quality in advance of a purchase. D) that an individual must consume before the quality can be established.
If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, and you conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, you would be guilty of an error called the
A. post hoc, ergo propter hoc fallacy. B. fallacy of logic. C. fallacy of inductive reasoning. D. fallacy of ceteris paribus.