In 1981,policy Makers in the Reagan Administration Predicted a Balanced

question 138

Multiple Choice

In 1981,policy makers in the Reagan administration predicted a balanced budget for the 1980s because

• A)the budget included a decrease in defense expenditures
• B)the budget included an increase in the tax rate
• C)the budget included an increase in unspecified government spending
• D)growth in GDP was expected to be large enough to lead to an increase in tax revenues despite the tax cut
• E)growth in GDP was expected to be small enough to require less government spending

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Definitions:

Competitor

An entity operating in the same industry or market as another, offering similar products or services.

Profit Maximizing

This is the process or strategy businesses employ to achieve the highest possible profit, where marginal revenues equal marginal costs.

Monopolistic Competition

A market structure characterized by many firms selling products that are substitutes but not perfect substitutes, leading to some degree of market power for each firm.

Cournot Duopoly

A market situation where two firms compete with one another by deciding on output quantity with the assumption that the other's decision remains constant.