What Has Been the Practical Effect on Macroeconomic Policy of the Huge

question 42

Multiple Choice

What has been the practical effect on macroeconomic policy of the huge U.S.federal budget deficits of the 1980s?

• A)The automatic stabilizers no longer functioned.
• B)It was tough gaining support to cut taxes or raise government purchases of goods and services during cyclical downturns.
• C)Monetary policy has become less useful than fiscal policy because the deficits are so large that they have a greater impact than the money supply.
• D)There has been more emphasis on fine-tuning the economy than there was previously.
• E)There is now a consensus among economists that a balanced budget amendment should be adopted.

Understand the concept of opportunity cost and how it applies to various decision-making scenarios.

Grasp the principle of marginal analysis and its application in everyday choices.

Recognize that opportunity costs involve both monetary and non-monetary factors.

Identify how opportunity costs influence government and individual spending decisions.

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Definitions:

Illegal Drugs

Substances whose production, sale, or possession are prohibited by law.

Correlated

A statistical relationship where two variables move in relation to each other.

Grade-Point Average

A numerical calculation that represents the average of all final grades earned in courses over time, often used as a measure of academic achievement.

Illusory Correlation

The false perception of a relationship between two variables or events, typically due to cognitive bias.