Contractionary fiscal policy is enacted when the overall effect of decisions about taxation and spending is to:
A. reduce aggregate demand.
B. increase aggregate demand.
C. reduce aggregate supply.
D. increase aggregate supply.
A. reduce aggregate demand.
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Suppose there are only two goods (bread and wine) and only two countries (England and Portugal). In England, the cost of producing 1 bottle of wine is 4 loaves of bread. What is the cost of producing 1 loaf of bread in England? Under what circumstances will England specialize in bread production and purchase its wine from Portugal? Explain.
What will be an ideal response?
If average revenue equals average total cost,
a. total revenue is maximized b. average revenue is maximized c. average total cost is minimized d. economic profit is maximized e. economic profit is zero
Adverse selection and moral hazard arise because of
A. mechanism designs for dealing with informational problems. B. asymmetric information. C. selection problems. D. risk aversion.
A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree. The basic reason for this wage differential is:
A. Efficiency wages B. Compensating differences C. Investment in human capital D. Nonmonetary aspects of work