Which one of the following reduces the likelihood that real-world fiscal policy will promote economic stability?
a. Policy planners do not know whether a tax cut is expansionary or restrictive.
b. Policy makers need to know what economic conditions will be like 6 to 18 months into the future, and this is extremely difficult to forecast accurately.
c. Policy planners are reluctant to implement expansionary fiscal policy even during a serious recession.
d. Public choice theory suggests that elected political officials will generally favor restrictive fiscal policy.
B
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If aggregate planned expenditures equal real GDP, then
A) unplanned inventory changes equal zero. B) inventories decrease below their planned levels and businesses increase their production. C) inventories decrease below their planned levels and businesses decrease their production. D) inventories increase above their planned levels and businesses decrease their production. E) there is no equilibrium level of real GDP.
An example of a monopoly would be
A) one of many U.S. wheat farmers. B) one of the few U.S. auto makers. C) AT&T cell phone service. D) the local water company. E) Taco Bell
Refer to Figure 3-1. If the product represented is an inferior good, an increase in income would be represented by a movement from
A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.
Microeconomics is primarily the study of how
A. people choose among alternatives. B. the stock market works. C. the economy functions as a whole. D. businesses can make money.