When total expenditures exceed the economy’s potential GDP, the proper fiscal policy is to
A. increase transfer payments to the poor and elderly.
B. cut personal income tax rates.
C. decrease government purchases.
D. increase purchasing power.
Answer: C
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How do economists measure the consumption of a good?
(A) The amount of a good that is bought for a specific amount of money. (B) The amount of money spent to buy a good. (C) The amount of a good that is bought. (D) The amount of a good that is actually used rather than bought.
In the long run when a perfectly competitive firm experiences positive economic profits,
A) firms exit the industry, the market supply curve shifts rightward, and the market price falls. B) firms enter the industry, the market supply curve shifts rightward, and the market price falls. C) firms exit the industry, the market supply curve shifts leftward, and the market price rises. D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.