It Will Be Difficult to Institute Fiscal Policy in a Stabilizing

question 29

Multiple Choice

It will be difficult to institute fiscal policy in a stabilizing manner because politicians will find

• A) it more attractive to raise taxes than to increase spending.
• B) it attractive to increase taxes during a recession, but they will be reluctant to reduce them during an expansion.
• C) budget deficits attractive during a recession, but they will be reluctant to run budget surpluses during an expansion.
• D) budget surpluses attractive during a recession, but they will be reluctant to run budget deficits during an expansion.

Understand the relationship between a firm’s average variable cost, average total cost, and market price in the context of operational decisions.

Identify the characteristics and implications of operating in a competitive price-taker market.

Understand the principles and characteristics of competitive price-taker markets.

Recognize the role of barriers to entry in shaping market competition.