The distinction between discretionary fiscal policy and the use of automatic stabilizers is that:
a. only discretionary fiscal policy can stimulate the economy.
b. only automatic stabilizers can stimulate the economy.
c. discretionary fiscal policy, once adopted, is built into the structure of the economy.
d. automatic stabilizers, once adopted, are built into the structure of the economy.
e. only discretionary fiscal policy can be used by the federal government.
QUESTION 2If a firm's long-run average cost curve is rising, it is experiencing:
a. a constant return to scale.
b. economies of scale.
c. diseconomies of scale.
d. none of these.
QUESTION 3For a given aggregate supply curve, price level and output will both increase when aggregate demand decreases.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The firm's demand for labor curve is exactly the same as the:
a. wage rate.
b. price of the output.
c. MRP curve.
d. MP curve.
e. labor supply curve.
QUESTION 5Which of the following are components of fiscal policy?
a. Transfer payments only
b. Money supply and government purchases
c. Government purchases only
d. Government purchases, transfer payments, and taxes
e. Taxes and money supply
QUESTION 6Suppose there is a technology to produce Grendels such that there are diseconomies of scale after the first unit is produced. There are both fixed (a physical plant called a lair) and variable (food that grows in lairs) costs of production. Which statement is true?
a. b and d.
b. Producing multiple units increases the average fixed cost.
c. There will be no more than one firm in this industry.
d. It is cheaper to make five Grendels by buying five lairs and producing one Grendel in each lair than it is to produce five Grendels in one lair.
e. This is an impossible situation.
QUESTION 7The aggregate supply curve reflects the inverse relationship between the interest rate and the quantity of real GDP supplied.
a. True
b. False
Indicate whether the statement is true or false
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