To signal to your insurance company that you are a low risk individual, you should
a. Accept an insurance policy with a high deductible
b. Accept an insurance policy with a low deductible
c. Accept an insurance policy with no co-payments
d. None of the above
a
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In the long run, perfectly competitive firms earn zero economic profit; this means that each firm is
a. always trying to move into a more profitable market. b. content to stay in its market. c. always facing new entrants to its market. d. earning negative accounting profit.
If the stock of physical capital remains constant while employment rises, output
a) initially declines, then eventually rises b) increases at an increasing rate c) remains constant in real terms d) increases at a decreasing rate e) fluctuates with the price level
Which of the following is an example of an external benefit?
A. A company opens a slaughterhouse at the end of your street. B. Firms are able to reduce their costs of production by using a more efficient technology. C. The city spends $500,000 to upgrade the local jail. D. More people start to install solar panels on their roofs, and as a result, electricity use goes down as does the pollution created by the generation of electricity.
Answer the following statements true (T) or false (F)
1. The key to assessing whether fiscal policy is expansionary or not is to observe the change in the cyclically-adjusted budget balance. 2. If the cyclically-adjusted budget has a zero deficit but the actual budget has a $100 billion deficit, then that means that the government is pursuing an expansionary fiscal policy. 3. The actual and cyclically-adjusted budgets will be equal when the economy is at full employment. 4. If the cyclically-adjusted budget deficit goes from 2% to 1% of GDP, then it indicates that fiscal policy has turned more contractionary.