The government establishes the rules of the game for economic transactions in order to
A. Encourage spillover costs.
B. Discourage the ownership of property.
C. Legitimatize and enforce contracts.
D. Discourage the production of capital.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. If the mpc is 0.8 and government spending increases by $10 billion, equilibrium Y will increase by $50 billion. 2. Decreasing taxes is an example of expansionary fiscal policy. 3. Most of the U.S. government debt is owed to foreign countries. 4. The HDI is an index of well-being. 5. The deficit is the sum of yearly government debts since 1776.
In explaining the evolution of money
A) government regulation is the most important factor. B) commodity money, because it is valued more highly, tends to drive out paper money. C) new forms of money evolve to lower transaction costs. D) paper money is always backed by gold and therefore more desirable than checks.