Which fiscal policy would be the most expansionary?
A. A $40 billion tax cut
B. A $20 billion tax cut and $20 billion increase in government spending
C. A $40 billion increase in government spending
D. A $10 billion tax cut and $30 billion increase in government spending
Answer: C
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The unemployment rate is calculated as:
A) (number of unemployed) ÷ (number of employed + number of unemployed). B) (number of unemployed) ÷ (number of employed). C) (number of employed + number of unemployed) ÷ (labor force). D) (labor force) ÷ (number of unemployed).
When the price of a good changes, the substitution effect can be found by comparing the equilibrium quantities purchased
A) on the old budget line and the new budget line. B) on the original indifference curve when faced with the original prices and when faced with the new prices. C) on the new budget line and a hypothetical budget line that is a shift back to the original indifference curve parallel to the new budget line. D) on the new indifference curve.
The gold standard is
A) a type of floating exchange rate system. B) a type of managed flexible exchange rate system. C) a type of fixed exchange rate system. D) a purely floating exchange rate system.
In order for education to be effective as a signal of worker productivity it must be
A. easy for everyone to get a college degree. B. costly for less productive workers to imitate. C. that the employee has taken classes in economics. D. none of the above make education an effective signal.