Can the U.S. federal government go broke as a result of a large national debt?
The U.S. government cannot go broke because it could always raise taxes, cut spending or print more money. However, as the national debt rises, a higher percentage of taxes collected would be required to pay the interest on the debt.
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According to the traditional Keynesian approach, a tax cut raises aggregate demand because
A) a tax cut always results in a balanced budget. B) taxes are part of the C + I + G + X line. C) taxpayers anticipate a tax increase in the future. D) disposable income available to consumers increases.
When voluntary exchange takes place, both parties gain from the exchange
Indicate whether the statement is true or false
Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The total dollar value damage to society is
a. 400 b. 450 c. 500 d. 550
The chief cause of short-run changes in exchange rates is
a. the world's political situation. b. "hot money" chasing high interest rates. c. changes in consumer tastes. d. central bank interventions.