Discretionary fiscal policy refers to
A) deliberate government efforts to stabilize the economy through government spending and taxes.
B) the use of automatic stabilizers and intervention policies to stabilize the economy.
C) any government policy that requires a lag period of at least three months.
D) the deliberate use of government spending and taxes to complement the effects of monetary
policy in an effort to stabilize the economy.
Ans: A) deliberate government efforts to stabilize the economy through government spending and taxes.
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The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then
A) firm A will not enter. B) neither firm will enter. C) both firms will enter. D) firm A will enter and firm B will not.
The Commons Problem arises because
A) firms don't maximize profits. B) social and private incentives are not aligned and property rights are missing. C) social cost equals private cost and property rights are missing. D) social benefit equals private benefit and property rights are missing.