Keynes believed that the best method for boosting an economy during a recession was to:
a. increase money supply so that individuals would have more incentive to spend
b. cut government spending and increase taxes to reduce or even eliminate fiscal deficit.
c. increase government spending and cut taxes so that consumers could spend more.
d. cut both government spending and taxes to reduce government expenditure in the economy.
e. increase both government spending and taxes to increase the role of government in the economy.
c
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A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss. B) makes zero economic profit. C) makes an economic profit. D) creates the maximum deadweight loss.
When the government provides a public good such as a highway,
a. society benefits without necessarily involving a reallocation of resources b. only highway users benefit and that occurs without necessarily involving a reallocation of resources c. it uses resources, but the benefits are so great there is no resource reallocation effect d. it necessarily reallocates resources away from the production of other goods e. it has the same resource allocation effect on the economy as a government transfer payment