Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. The Democrat says that, on average, infrastructure spending does the most good, so more is better. The Republican is arguing that the extra cyber-security purchased by the extra spending will increase well-being the most. What is going on here?
A. Both are employing marginal analysis, just from different perspectives.
B. Only the Republican is using marginal analysis.
C. Neither are using marginal analysis.
D. Only the Democrat is using marginal analysis.
Answer: B
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In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be
A) an increase in the price received by producers, from P0 to Ps. B) a decrease in the price received by producers, from Ps to P0. C) an increase in the price paid by consumers, from P0 to Ps. D) a decrease in the price paid by consumers, from Ps to P0.
Answer the following statements true (T) or false (F)
1. If expectations are always met, then firms would never contribute to any of the short-run fluctuations in employment and output that are observed in real-world economies 2. If the prices of goods and services were flexible, then the economy could always produce at its optimal capacity. 3. An unexpected negative demand shock would lead to a decrease in inventories 4. An unexpected negative demand shock would lead to a decrease in real GDP. 5. Sticky prices could be the result of firms being afraid of price wars.
Cold turkey refers to the announcement and execution of tough measures to reduce high inflation
Indicate whether the statement is true or false
The measure of what households receive after personal income tax is deducted is
A. National income. B. Personal income. C. Disposable income. D. Gross domestic product.