If the economy falls into a recession, automatic stabilizers will cause:
A. tax receipts to fall and government spending to rise.
B. both tax receipts and government spending to fall.
C. tax receipts to rise and government spending to fall.
D. both tax receipts and government spending to rise.
Answer: A
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The figure above illustrates the marginal private cost and the marginal social cost to the city of Seattle for each rock concert that is offered. It also illustrates the marginal benefit. There is no external benefit
If the city of Seattle puts on 5 concerts per year, then the marginal benefit will A) exceed the marginal social cost. B) equal the marginal private cost. C) be less than the marginal social cost. D) equal the marginal social cost. E) None of the above answers is correct.
If expectations are formed rationally, then individuals
A) will have a forecast that is 100% accurate all of the time. B) change their forecast when faced with new information. C) use only the information from past data on a single variable to form their forecast. D) have forecast errors that are persistently low.