Suppose total government spending is increased permanently by ten percent, with no change in tax rates. In the long run, the resulting deficit will disappear, ________
A) only if government spending is brought back down to the original level
B) if economic growth raises tax revenue by ten percent
C) if the government debt is sold to foreigners
D) unless the money is spent entirely on government consumption
B
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Although an improvement in technology enables perfectly competitive firms to earn a positive economic profit in the short run, entry by new firms will ensure that those profits are eliminated over time
Indicate whether the statement is true or false
Which of the following would increase the incentive of healthcare consumers to economize and help reduce the future growth of healthcare prices in the United States?
a. an increase in the share of healthcare costs paid for either directly or from personal medical savings accounts b. subsidies that would encourage consumers to purchase low co-payment insurance plans c. a new government program that would cover the cost of prescription drugs purchased by all healthcare consumers d. a reduction in the eligibility age for the coverage of Medicare from 65 to 55 years of age
Suppose the MPC is 0.8 in Canada and the MPC h is 0.55. If income increases by $100 million in Canada, then the increase in consumption of foreign goods will be:
a. $35 million. b. $25 million. c. $80 million. d. $100 million.
Scarcity exists when:
A) a choice must be made among two or more alternatives. B) we face the notion of "all other things unchanged." C) countries and people find themselves facing poverty. D) the notions of normative economics come into play.