Which of the following is not a weakness of fiscal policy as a tool of economic stabilization?
a. It is ineffective in dealing with stagflation.
b. Its correct implementation depends on an accurate estimate of potential output.
c. It is subject to lags.
d. It affects only aggregate demand but does not have any impact on aggregate supply.
e. Households may not respond to changes they perceive as permanent.
Question 2
Wage and MFC differ for a monopsonist because:
a. the monopsonist is forced to pay a wage greater than the worker's MFC.
b. the monopsonist must accept the market wage rate.
c. workers are not as efficient when employed by a monopsonist.
d. any wage increase applies to all workers, not just to the next hired.
e. wage rate decreases force workers to work longer hours.
