Assume that an economy's real GDP multiplier is 2 and that this economy is in equilibrium at $500 billion. If the government wants to move this economy to full-employment at $600 billion, while maintaining a balanced budget, it must choose which of the following options?
A. Increase government spending and taxes by $100 billion
B. Decrease government spending and taxes by $100 billion
C. Increase government spending and taxes by $200 billion
D. Decrease government spending and taxes by $200 billion
Answer: A
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In the above table, which tax plan is proportional?
A) only plan A B) only plan B C) only plan C D) both plan A and plan C
The relationship between annual real per-capita GDP and corruption across countries has been found to be
A) negative. B) positive. C) The relationship was negative in the late 1960s but is now positive. D) The relationship was in the late 1960s but is now negative. E) There is no relationship between these two variables.
The problem of asymmetric information that brings about a general decline in product quality in an industry is
A) a market failure. B) the result of government regulation. C) creative response. D) the lemons problem.
Suppose Larry's Lariats produces lassos in a factory, and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. Which of the following would be considered a fixed cost for this company?
A. Employee wages B. The cost of rope C. The packaging material D. None of these would be considered a fixed cost.