One reason why the government may not choose to close a recessionary gap by raising both taxes and spending and thereby keeping the budget balanced is because it
a. leaves undone the problem of unemployment
b. can create inflation
c. may involve raising taxes too high for political comfort
d. eventually leads to deficit budgets
e. does not impact on aggregate demand which is where the problem lies
C
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Which of the following DOES NOT contribute to the market power of a firm?
A) number of available substitutes B) the color of the product C) legal protections D) the number of firms in the market
An increase in supply results in a(n)
a. increase in demand b. decrease in equilibrium quantity and an increase in equilibrium price c. decrease in equilibrium quantity and a decrease in equilibrium price d. decrease in equilibrium price and an increase in equilibrium quantity e. unfavorable shift in tastes and preferences