The Simpler a Production Process Is

question 14

Multiple Choice

The simpler a production process is,

• A)the greater the cost of production
• B)the greater the transaction cost of using markets
• C)the more likely a firm will use the market to organize production
• D)the more likely a firm will used centralized control to organize production
• E)the more likely that transaction costs increase by using centralized control of production

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Definitions:

Crowding Out

A situation in which increased government spending leads to a reduction in private sector spending and investment.

Contractionary Gap

A situation where an economy's real GDP is lower than its potential GDP, indicating underutilization of resources.

Cyclically Balanced

An economic situation where fiscal policy is designed to be neutral over the business cycle, allowing for temporary deficits or surpluses but aiming for a long-term balance.

Federal Deficits

The financial situation in which a government's expenditures exceed its revenues within a given fiscal year, leading to borrowing or the issuance of debt.