If the actual interest rate is below the equilibrium interest rate, the
a. Fed must intervene in financial markets to restore the interest rate to its equilibrium value
b. price of bonds will increase
c. price of bonds will decrease
d. money supply will increase until the interest rate rises
e. money supply will decrease until the interest rate rises
C
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Everything else held constant, a decrease in government spending ________ aggregate ________
A) increases; demand B) decreases; demand C) decreases; supply D) increases; supply
Assume that we want to drive our economy out of recession by generating a $400 billion change in real GDP. The MPC is 0.80 . Which of the following policy prescriptions would generate the targeted $400 billion change in income?
a. $120 billion increase in government spending and $50 billion increase in tax revenue. b. $140 billion increase in government spending and $70 billion increase in tax revenue. c. $160 billion increase in government spending and $120 billion increase in tax revenue. d. $220 billion increase in government spending and $100 billion increase in tax revenue. e. $400 billion increase in government spending and $300 billion increase in tax revenue.
If a firm sells its output at a price greater than AC, it will earn economic profit
a. True b. False Indicate whether the statement is true or false
Taxes create deadweight loss when they
a. distort behavior. b. cause the price of the product to increase. c. don't raise sufficient government revenue. d. cannot be computed easily.