The table above gives GDP and expenditures for an economy with no international trade and with lump-sum taxes. All the numbers are billions of dollars. C is consumption expenditure, I is investment, and G is government purchases. If the government decides to increase its purchases by an additional $450 billion, equilibrium GDP increases to
A) $7,250 billion. B) $10,450 billion.
C) $5,450 billion. D) $7,450 billion.
A) $7250 billion
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Which of the following describes the "invention" of banking?
A) Clergy in the Renaissance created the banking system to help further the growth of the church. B) Goldsmiths in the sixteenth century issued gold receipts which entitled its owners to reclaim their gold on demand. C) The United States government founded the Federal Reserve in 1913. D) The British Empire created a banking system to fund its exploration of the New World. E) Members of the New York Stock Exchange founded the Bank of America in the 1700s.
Isoquants reflect the fact that in the long run:
a. inputs can be substituted for each other. b. a fixed set of inputs can produce different levels of output. c. inputs used in production are complementary in nature. d. different levels of input can be used to satisfy a budget constraint.
A paper plant produces water pollution during the production process. If the government forces the plant to internalize the negative externality, then the
a. supply curve for paper would shift to the right. b. supply curve for paper would shift to the left. c. demand curve for paper would shift to the right. d. demand curve for paper would shift to the left.
The national debt is unlikely to cause national bankruptcy because the:
a. federal government cannot refinance the outstanding national debt. b. interest on the public debt equals GDP. c. national debt cannot be shifted to future generations for repayment. d. national debt can be refinanced by issuing new bonds.