Which of the following is an argument in favor of a balanced budget rule?
a. Some economists believe that rules are better than discretion.
b. Per-capita debt is small relative to lifetime income.
c. The effect of deficit spending on future generations depends in part on what the government buys.
d. Other government policies also redistribute income across generations.
a
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How is it possible for consumption expenditure to be positive even when disposable income is zero?
What will be an ideal response?
Taxpayers would be better off if a tax could just raise revenue without ______
a. altering the relative prices they face b. altering their preferences for a good c. tax shifting d. any income effects
If equilibrium is present in a market,
a. quantity demanded exceeds quantity supplied. b. quantity demanded equals quantity supplied. c. quantity supplied exceeds quantity demanded. d. the price of the product will tend to rise.
Because of the multiplier, a one-time change in expenditure will...
a) have little secondary effect on real GDP b) expand real GDP by an infinite amount c) generate more additional real GDP than the initial change in expenditure d) decrease saving and investment activity and thereby decrease future real GDP