Suppose a wave of investor and consumer pessimism causes a reduction in spending. If the Federal Reserve chooses to engage in activist stabilization policy, it should
A. decrease the money supply and increase interest rates.
B. increase the money supply and decrease interest rates.
C. decrease government spending and increase taxes.
D. increase government spending and decrease taxes.
Answer: B. increase the money supply and decrease interest rates.
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Public goods, when left to the private market will be:
A. undersupplied. B. over consumed. C. under consumed. D. oversupplied.
Whenever marginal cost exceeds marginal revenue,
a. profit declines if the firm reduces output b. profit increases if the firm increases output c. the firm should shut down d. losses decrease if the firm increases output e. profit declines if the firm increases output
When a country allows international trade and becomes an importer of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off
a. True b. False Indicate whether the statement is true or false
As sales of digital cameras increase, so do sales of photo printers. What factor is affecting demand?
a. consumer expectation b. consumer taste c. complements d. substitutes