Automatic stabilizers are government programs that:
A. exaggerate the ups and downs in aggregate demand without legislative action.
B. bring expenditures and revenues automatically into balance without legislative action.
C. shift the budget toward a deficit when the economy slows but shift it toward a surplus during an expansion.
D. increase tax collections automatically during a recession.
Answer: C
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We observe evidence of a shortage when we see
A) the quantity purchased is greater than the quantity supplied. B) the quantity purchased is less than the quantity supplied. C) nonmonetary costs of acquisition have risen. D) goods have becomes more scarce. E) prices have increased suddenly and substantially.
A natural monopoly is likely to arise when:
a. the government restricts entry through licensing b. patents provide protection of intellectual property. c. economies of scale exist over the relevant range of demand. d. a firm controls a crucial input to production.