_____, the lesser will be the effect of an increase in government spending on real GDP
a. The smaller the crowding-out effect
b. The smaller the percentage of government spending financed by tax increases
c. The larger the government budget surplus
d. The more rapidly money is converted into goods
e. The steeper the aggregate supply curve
e
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Government can correct for negative externalities by
A) decreasing taxes. B) increasing taxes or regulation. C) allowing the market system to correct the problem. D) decreasing the costs to those responsible for the externality.
When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile, or a Compaq computer instead of an IBM computer, an economist would assert:
a. that the consumer is making a decision based on what gives him maximum utility. b. that everyone knows Hondas are superior to Fords; the consumer cannot possibly be maximizing his utility. c. that everyone knows IBM computers are superior to Compaq computers; the consumer may be maximizing his utility at the margin, but is not maximizing total utility. d. that there is no standard explanation for consumer choices because consumers have varied tastes and preferences. e. that since rationality is bounded by lack of information, a consumer purchases goods based on convenience rather than on utility maximization.