According to Keynes, the goal of macroeconomic policy is not to balance the budget but to achieve equilibrium at full employment.
Answer the following statement true (T) or false (F)
True
Keynesian theory highlights the potential of fiscal policy and therefore the budget to solve our macro problems such as equilibrium output that differs from full-employment output. In Keynes's view, a balanced budget would be appropriate only if all other injections and leakages were in balance and the economy was in full-employment equilibrium.
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Government-imposed quantity restrictions
A) generate a higher price for the good than would prevail under freely competitive markets. B) generate a lower price for the good than would prevail under freely competitive markets. C) does not affect the price of the good because quantity restrictions always ban sale of the good completely. D) can cause prices to either be higher or lower, but always cause excess quantities supplied to develop.
If Ed is willing to pay a maximum of $200 for a tweed sport coat but buys one for $180, that $20 saved is
a. his reservation price b. the store's producer surplus c. his total expenditure d. his marginal utility e. his consumer surplus
Which of the following shows a decrease in income in this graph?
a. Area f is larger than area e.
b. Area f is larger than area d.
c. Area d is larger than area f.
d. Area d is larger than area e.
Positive Vs. Normative Economic Analysis
What will be an ideal response?