What is the goal of fiscal policy, and what tools have policymakers traditionally used to conduct fiscal policy?
What will be an ideal response?
The goal of fiscal policy is to reduce the severity of economic fluctuations, and is focused primarily on employment and production. Traditional policy tools of fiscal policy are changes federal government purchases of goods and services, changes in federal taxes, and changes in transfer payments.
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The substitution effect that occurs when interest rates change involves a change in consumption that develops from ________
A) a change in the general level of prices B) a period of increasing productivity C) a change in the level of income D) a change in the relative prices of consumption in the two periods
The conditions in which vertical relationships can enhance a firm's ability to price discriminate include
a. the manufacturer's product is of value to multiple types of customers b. the costs of arbitraging the price difference across markets is large c. the manufacturer acquires the distributer in the higher priced market d. competition provides little ability for the manufacturer to price above marginal cost