John M. Keynes is best known for advocating:
(a) A policy of annually balancing the budget.
(b) Deficit spending during some recessions.
(c) Contractionary fiscal policy during a recession.
(d) Expansionary fiscal policy during a boom.
Answer: (b) Deficit spending during some recessions.
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To optimally deter crime, law enforcement authorities should:
A) set higher fines for crimes that have a lower probability of being caught. B) set the fine equal to the expected benefit, even if it is difficult to catch the offenders. C) ignore the probabilities of catching offenders and attempt to prevent crime at all costs. D) set very high fines regardless of the probability that an offender is caught.
All economic models must involve simplifications because
a. economists would be unable to command high salaries if their models were so simple that anyone could understand them b. human behavior is very erratic and unpredictable c. reality is too complex to understand in its entirety, so we must reduce it to a level that we can understand d. they always try to duplicate all possible information and cover all possible variables that might influence decision making e. we must rely on value judgments and ignore reality
GDP is a measure of:
a. domestic production. b. changes in the general level of prices. c. material well-being. d. social welfare.
A monopolist that is making a profit is producing where which of the following occurs?
A. P = MC. B. P = AC. C. MC = AC. D. P > AC.