Solution Manual For Microeconomic Principles and Problems A Pluralist Introduction 2e By Geoffrey Schneider Chapter 1-24 Chapter 1 1. Which economist made the following statement: “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else.”? a. Adam Smith. b. Karl Marx. c. John Maynard Keynes. d. Milton Friedman. ANSWER: C 2. Austerity refers to government policies such as (select one or more) a. Eliminating social programs. b. Increasing taxes. c. Decreasing government spending. d. Reducing taxes. ANSWER: A, B 3. When an economy enters a recession, it usually runs budget deficits because in recessions tax revenues fall while government spending increases. In such cases, some economists advocate austerity—decreasing government spending or increasing taxes— to balance the government budget. However, austerity does not usually succeed in eliminating government deficits in recessions because (select one or more) a. Increases in taxes reduce consumer and business spending, which reduces growth. b. Decreases in government spending reduces incomes, which reduces spending and growth. c. Decreases in taxes do not lead to increases in consumer and business spending. d. Increases in government spending are wasteful and to not benefit economic growth. e. None of the other answers are correct. ANSWER: A, B 4. The United States economy tends to hit a crisis called a recession every a. 2-4 years b. 4-6 years c. 8-12 years d. 12-14 years ANSWER: C
Test Bank for Microeconomic Principles and Problems A Pluralist Introduction 2nd Edition By Geoffrey
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