The government possesses the tools necessary to influence the output level in the short run through use of monetary and fiscal policy. However, there is some debate regarding whether the government should attempt to stabilize the economy. Which of the following are arguments in favor of active stabilization policy by the government? Check all that apply. The current tax system acts as an automatic stabilizer. Changes in government purchases and taxation must be passed by both houses of Congress and signed by the president. Shifts in aggregate demand are often the result of waves of pessimism or optimism among consumers and businesses. The Fed can effectively respond to excessive pessimism by expanding the money supply and lowering interest rates. Which of the following policies are examples of automatic stabilizers? Check all that apply. Corporate income taxes Personal income taxes The federal funds rate

The bursting of the dot-com bubble in 2000, along with the terrorist attacks in 2001, made the U.S. government Multiple Choice   decrease its cyclically adjusted budget deficit from 2000 to 2002.   increase its cyclically adjusted budget surplus from 2000 to 2002.   increase its cyclically adjusted budget deficit from 2000 to 2002.   increase its actual budget surplus from 2000 to 2002.

Fiscal policy refers to changes in Group of answer choices federal taxes and purchases that are intended to fund the war on terrorism.   the money supply and interest rates that are intended to achieve macroeconomic policy objectives.   federal taxes and purchases that are intended to achieve macroeconomic policy objectives.   state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.

Assume the market for a good is perfectly competitive and the market equilibrium price is $5.00. The profit maximizing output is 200. At this output level, the AVC = $3.00 and ATC = $6.00. %D %3D a. Should the firm keep producing in the short run? b. What are profits or losses in either scenario? Suppose the market price of a good is $20 and TC=0.5Q2. What Q should a profit maximizing perfectly competitive firm choose? What are profits? Suppose that the long run TC function is as follows: TC=1000+10Q² (and total cost is 0 if Q is less than 0). If the going price in the industry is $300, is the market in long run equilibrium? If not, what will the long run equilibrium price be? Show the adjustment using an industry and individual firm graph.