Fiscal policy refers to:
A. government policies aimed at changing the underlying structure or institutions of the economy.
B. decisions to determine the government's budget.
C. policy directed toward increasing exports and reducing imports.
D. the determination of the nation's money supply.
Answer: B
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If real GDP equals aggregate planned expenditure, then inventories
A) fall below their target levels. B) rise above their target levels. C) equal their target levels. D) are either above or below their target levels depending on whether planned inventories are above or below their target levels. E) None of the above answers is necessarily correct because there is no relationship between inventories and aggregate planned expenditure.
An allocation of resources is Pareto optimal if
A. no further mutually beneficial exchange is possible. B. it is possible to make everyone else better off. C. it is possible to make one person better off without making at least some others worse off. D. it is below the contract curve.
Gasoline stations carrying the same fuel brand (e.g., Chevron) are able to charge different prices in San Francisco because:
A. location is a source for product differentiation. B. gasoline stations are perfect price discriminators. C. gasoline station operators form a cartel to act as a monopoly. D. fuel quality varies across stores.
Today, the most common exchange rate arrangement in the world is
A. the fixed exchange rate system. B. the managed floating system. C. the gold standard system. D. the freely floating exchange rate system.