A disadvantage of having an annually balanced budget is that government spending would have to:
a. allow the national debt to burgeon with chronic deficits
b. decline during a recession to offset the increase in tax revenues.
c. rise during a recession to match the increase in tax revenues.
d. rise during an expansion to offset the decline in tax revenues.
e. decline in a recession to match the decrease in tax revenues.
e
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Pegging a country's exchange rate to the dollar can be advantageous if
A) investors believe the dollar to be more stable than the domestic country's currency. B) a country wishes to conduct independent monetary policy. C) imports are not a significant fraction of the goods the country's consumers buy. D) the country does not trade much with the United States.
A movement along the supply curve might be caused by a change in
a. production technology. b. input prices. c. expectations about future prices. d. the price of the good or service that is being supplied.
If consumers become less confident and begin to borrow and spend less, what will happen in the dynamic AD/AS model?
A. The short-run aggregate supply curve will shift downward. B. The long-run aggregate supply curve will shift to the left. C. The aggregate demand curve will shift to the left. D. The aggregate demand curve will shift to the right.
Answer the following statement(s) true (T) or false (F)
1. The production possibilities curve highlights the concept of trade-offs 2. An economy operating inside the production possibilities curve is efficient. 3. Misallocation of resources can lead to inefficiency. 4. If an economy uses all its resources efficiently, it will operate at a point beyond its current production possibilities curve.