In theory, fiscal policy should:
A. increase aggregate demand in bad times and pay off the bill in good times.
B. increase aggregate demand in bad times and increase aggregate supply in good times.
C. reduce aggregate demand in bad times and take the profits in the good times.
D. increase aggregate demand in bad times and increase inflation in good times.
Ans: A. increase aggregate demand in bad times and pay off the bill in good times.
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One drawback to industrial policy is that
a. technology spillovers are too expensive to control. b. measuring the size of spillovers from different markets is difficult. c. spillovers often occur in industries that produce undesirable products for society. d. positive side effects are often outweighed by negative side effects.
As more units of an item are purchased, everything else equal, marginal satisfaction from consuming additional units will tend to
a. decrease at the same rate for all consumers. b. decrease but at different rates for different people. c. increase at the same rate for all consumers. d. increase but at a decreasing rate for all consumers.