When thinking about the economic actions of groups of people, firms, and society, it is reasonable to analyze them with the tools of economic analysis. Discuss
The economic approach can be a useful way to analyze and understand the tradeoffs of economic decisions even if economic agents do not always use this approach to make actual decisions. From an economic point of view, someone who goes shopping for groceries every week has a great deal of practice with how to purchase the combination of goods that will provide the most utility, even if the shopper doesn't phrase decisions in terms of a budget constraint. Government institutions may work imperfectly and slowly, but in general, a democratic form of government feels pressure from voters and social institutions to make the choices that are widely preferred by people in that society.
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In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause
A) a reduction in real GDP with falling prices if the economy was below or at full employment. B) an inflationary gap if the economy was initially operating below full employment. C) an inflationary gap if the economy was initially operating at full employment. D) an increase in real GDP with stable prices if the economy was below full employment.
Refer to the diagram, representing Slippery Slope Oil Company. What is the user cost of extracting a barrel of oil this year?
A. $20.
B. $40.
C. $50.
D. $70.