Which of the following types of government spending is included when calculating GDP?
A) spending at the federal level
B) spending at the state level
C) spending at the municipal level
D) all of the above
E) only A and B
D
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If all income is consumed in a year, then
A) income next year will increase. B) investment spending will be zero. C) any investment spending will be done by the government. D) investment spending will increase.
Why has the federal government generally run budget deficits over the past several decades?
A) Political pressures make expenditures hard to control. B) The federal government's control of the money supply enables it to borrow indefinitely without becoming unable to find creditors. C) The public has accepted the notion that budget deficits can be good for the economy. D) A combination of the three factors mentioned above.
The natural rate of unemployment is made up of
A) seasonal and structural unemployment. B) frictional, cyclical, and structural unemployment. C) cyclical and structural unemployment. D) frictional and structural unemployment. E) frictional and cyclical unemployment.
Suppose the economy is currently experiencing 9% inflation per year. If the Fed wants to reduce inflation to 3% and the sacrifice ratio is 4, then how much annual output must be sacrificed in the transition?
a. 4% b. 8% c. 16% d. 24%