In Year 1, the actual budget deficit was $150 billion and the cyclically-adjusted deficit was $125 billion. In Year 2, the actual budget deficit was $130 billion and the cyclically-adjusted deficit was $125 billion. It can be concluded that from Year 1 to Year 2:
A. Real GDP decreased
B. Real GDP increased
C. Full employment was attained
D. Fiscal policy became less expansionary
B. Real GDP increased
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"If Bill's income increases from $80,000 per year to $91,000 per year and he consumes pickup trucks and lamb chops with his money, Bill's budget line shifts outward and the increase in income means he can consume more trucks and more lamb
" Is this statement true or false? Briefly explain your answer.
The theory of expected utility theory
A) predicts all actions involving uncertainty. B) predicts no actions involving uncertainty. C) predicts some, but not all, actions involving uncertainty. D) predicts only one in three actions involving uncertainty.
Refer to Scenario 5.6. The expected utility of income from research is
A) u($275,000 ). B) u($95,000 ). C) [u($500,000 ) + u($50,000 )]/2. D) .1 u($500,000 ) + .9 u($50,000 ). E) dependent on which outcome actually occurs.
Joe's bell pepper stand is a competitive firm. Joe sells 90 bell peppers a day, and the market price for bell peppers is $5. Below is Joe's cost curves (price is measured in dollars and quantity is measured in number of peppers).
What can you say about Joe's short-run decision regarding shutdown?
a. The market price is too low, so Joe should shut down
b. The market price is too high, so Joe should shut down
c. The market price is high enough to cove relevant costs, so Joe should operate
d. At the market price the Joe will earn positive profit, so he should operate