A firm is producing a joint product, Product A and Product B, with variable proportions. At its current production levels, the marginal benefit of producing Product A is $3 and the marginal cost is $2 and the marginal benefit of producing Product B is $4 and the marginal cost is $5. To maximize profits, the managers of the firm should produce ________ of Product A and ________ of Product B.

There are four limitations to the effectiveness of discretionary fiscal policy. Which item below is NOT one of these limitations?

A) shrinking area of lawmaker discretion B) lawmaking time lag C) estimating potential GDP D) fiscal multiplier E) economic forecasting

The proponents of rational expectations believe that

a. there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy. b. macro-policies that stimulate demand and place upward pressure on the general level of prices will temporarily increase output and employment. c. the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal. d. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.