Which of the following is true?
a. There is a fixed size of economic pie available for the government to allocate among individuals.
b. In a market economy, the link between productivity and income provides individuals with an incentive to provide resources that are highly valued by others.
c. Taxes and transfers do not affect the amount of income that is created.
d. How income is distributed exerts little impact on the total amount of income generated.
B
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The use of government expenditures and taxes to influence the level of economic activity is called
A) deficit management policy. B) debt management policy. C) financial policy. D) fiscal policy.
Economic models are built with
a. recommendations concerning public policies. b. facts about the legal system. c. assumptions. d. statistical forecasts.