The economy is in a recessionary gap, wages are inflexible downward, and there is complete crowding out. Which of the following is consistent with this state of affairs?
A) The economy will soon self-regulate and produce Natural Real GDP.
B) Expansionary fiscal policy will be effective at removing the economy from the recessionary gap.
C) If expansionary fiscal policy is implemented, the AD curve will shift to the right, and eventually the price level and Real GDP will rise.
D) b and c
E) none of the above
E
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Free riders are not a problem in the market for a private good because
A) non-payers can be excluded from consuming the good. B) the good is a rival good. C) the good can be produced only at a positive marginal cost. D) the free rider will not get caught.
Steve Ballmer organized government spending data on the basis of four "missions" for government that he identified in the preamble to the U.S. Constitution. The data
A) reinforces previously gathered data that most of the basic activities of government are conducted at the state and local levels rather than at the federal level. B) reinforces previously gathered data that most of the basic activities of government are conducted at the federal level rather than at state and local levels. C) contradicts previously gathered data that most of the basic activities of government are conducted at the state and local levels rather than at the federal level. D) contradicts previously gathered data that most of the basic activities of government are conducted at the federal level rather than at state and local levels.