Which of the following is considered contractionary fiscal policy?
A) The New Jersey legislature cuts highway spending to balance its budget.
B) Legislation removes a college tuition deduction from federal income taxes.
C) Congress increases the income tax rate.
D) Congress increases defense spending.
C
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Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs
First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's shut down in the short run? A) Yes, because he is incurring an economic loss. B) Yes, because he cannot cover all of his fixed costs. C) No, because is making positive economic profit. D) No, because he can cover all of his variable costs.
What are the two most common reasons for a sovereign debt crisis?
What will be an ideal response?