Functional finance is:
A. a theoretical proposition, not a moral proposition.
B. a proposition supported by public choice economists.
C. based on empirical evidence that fiscal policy can be effective in smoothing business cycles.
D. based on the political realities of voters wanting their government to respond to recessions.
Answer: A
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Monetarists view government intervention in the economy as
A) necessary to maintain full employment. B) unnecessary and potentially damaging. C) effective because it stimulates capital formation. D) leads to consistently higher employment and output.
Answer the following statement true (T) or false (F)
1) If the coefficient of cross elasticity of demand is positive, the two products are complementary goods. 2) An income elasticity coefficient of -1.8 means the product is a normal good. 3) A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes. 4) We would expect the coefficient of cross elasticity of demand for DVD players and DVDs to be positive.