Explain the difference between discretionary and automatic fiscal policy. Provide examples of each
What will be an ideal response?
Discretionary policy is an action that is initiated by an act of Congress such as implementation of a spending program or a change to tax law. Automatic fiscal policy is triggered by the state of economy and happens naturally such as a decrease in tax revenues as a result of a fall in incomes or an increase in unemployment payments due to an increase in the unemployment rate.
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Explain why a firm maximizes its profits by producing the level of output at which marginal revenue equals marginal costs
What will be an ideal response?
A cartel is likely to last longer if
A) more new firms enter the market. B) the profits of participating members are relatively stable. C) market prices vary more over time. D) there are more firms in the industry.