Which of the following best expresses the central idea of countercyclical fiscal policy?
a. Planned deficits are experienced during economic booms and planned surpluses during economic recessions.
b. The balanced-budget approach is the proper criterion for determining annual budget policy.
c. Actual deficits should equal actual surpluses during a period of deflation.
d. Deficits are planned during economic recessions, and surpluses are utilized to restrain inflationary booms.
D
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The figure above shows the market for milk. If one firm owns all the milk outlets in the city and sells 100 gallons of milk
A) the market is efficient because the marginal social benefit from the last gallon of milk exceeds its marginal social cost. B) the market is efficient because the total social benefit from milk exceed the total social cost. C) there is a deadweight loss because the marginal social benefit from the last gallon of milk exceeds its marginal social cost. D) there is a deadweight loss because the marginal social cost of the last gallon of milk exceeds its marginal social benefit.
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.