A supply-side policy to cure stagflation would include
A. Reduced government spending.
B. A higher reserve requirement.
C. Reduced government regulation.
D. The purchase of securities in the open market by the Fed.
Answer: C
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During a recession, unemployment compensation payments increase without the need for any government action. This increase is an example of
A) discretionary monetary policy. B) automatic monetary policy. C) automatic fiscal policy. D) discretionary fiscal policy. E) government expenditure, but it is not an example of either discretionary or automatic policy.
Because of easy entry, monopolistically competitive firms will
a. produce at the lowest average total cost b. charge a price equal to marginal cost c. earn no economic profit in the long run d. take advantage of all economies of scale e. earn no economic profit in the short run