Explain why a balanced budget has an expansionary effect on the economy
A balanced budget is expansionary because equal increases in government spending and taxes do not
exactly offset each other in terms of changes in aggregate expenditure. All of the government spending is
added to aggregate expenditure, while only part of the tax change is subtracted from aggregate expenditure
in the form of lower consumption expenditure.
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Assuming all else equal, if the price of fuel and energy increases, ________
A) a firm's labor demand curve shifts to the right B) a firm moves to a lower point along its labor demand curve C) a firm's labor demand curve shifts to the left D) a firm moves to a higher point along its labor demand curve
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sport equipment producers' share of this tax would be greater than shown in the above figure if
A) the demand was more elastic. B) the demand was more inelastic. C) the supply was more elastic. D) Both answers A and C are correct.
The Fed's principal decision-making body, which directs buying and selling U. S. government securities, is known as the:
a. Federal Deposit Insurance Corporation. b. District Board of Governors. c. Federal Open Market Committee. d. Reserve Requirement Regulation Conference.
Which of the following is an example of an efficiency wage?
a. a higher wage paid to a more experienced worker b. a below-equilibrium wage paid by a small business exempt from minimum-wage laws c. an above-equilibrium wage paid by a firm to reduce turnover costs d. a wage tied to participation in a government-sponsored job training program