When is a business considered to have gained illegal monopoly power?
A business is considered to have gained illegal monopoly power when it obtains or maintains control of a market through anticompetitive actions that unfairly exclude competitors or prevent competition. A large market share by itself is not necessarily illegal.
Government spending that is required by laws that have been previously passed is called __________ spending.
It can be difficult for fiscal policy to influence the economy in the way the government hopes it will. All of the following are reasons for this EXCEPT:
What actions can the government take if it has a contractionary fiscal policy? How do these actions help to reduce inflation?
The government can reduce its spending, raise taxes, or do both. These actions lower overall demand for goods and services, which can slow price increases and help reduce inflation.
Why would the FTC and the Justice Department be concerned about the merger of two strong companies in a market with few competitors? What advantages could the newly-formed company have?
The FTC and Justice Department may worry that the merger would reduce competition in a market that already has few competitors. The new company could have a larger market share and greater market power, which might let it raise prices, restrict output, or make it harder for other businesses to compete. It may also gain efficiencies from combining resources.
Describe several ways that personal and government budgeting are similar. In addition, explain one important way they are different.
Both personal and government budgets estimate income or revenue, plan expenses, set priorities, and compare planned spending with available funds. One important difference is that governments can raise revenue by taxing people and businesses and can borrow by issuing debt; individuals cannot tax others.
Buying a government bond is __________.
What actions can the government take if it has an expansionary fiscal policy? How do these actions help to increase employment?
The government can increase its spending, lower taxes, or do both. These actions increase demand for goods and services; businesses may respond by producing more and hiring more workers, which helps increase employment.
Government often handles large natural monopolies such as water and power companies by __________.
A fiscal year is best described as a __________ year.
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