Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
A. ignore the inflation tax.
B. confuse repayment of principal with real interest expenditures.
C. double count some expenditures.
D. understate real interest rates.
Answer: B
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If the MPC is 0.75, the expenditure multiplier will be
A. 3.5. B. 4. C. 2. D. 3.
One disadvantage of government subsidies over price controls is that subsidies
a. prevent the attainment of equilibrium in the markets in which they are imposed. b. make higher taxes necessary. c. are always unfair to those with low incomes. d. cause unemployment.
Which of the following is not correct?
a. The producer who requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. b. The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X. c. The producer who has the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good. d. The gains from specialization and trade are based not on comparative advantage but on absolute advantage.
Economic analysis assumes "purposeful behavior", which means that people will pursue decisions or actions:
A. That will increase their well-being B. Always based on full or complete information C. With minimal consideration for their emotions D. Without any logical faults