Critically evaluate the statement, "Budget deficits can only be bad for a country."
What will be an ideal response?
The statement is not correct. One time when running a budget deficit can be good for a country involves the case of automatic stabilizers. When the economy goes into recession, tax revenue falls and social insurance payments go up, softening the recession but also increasing the deficit. Those who believe in Ricardian Equivalence might also argue that budget deficits do not matter.
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Use the figure below to answer the following question.
Refer to the three demand curves. An "increase in quantity demanded" caused by a change in price would be illustrated by a change from
A. point 2 to point 5. B. point 4 to point 6. C. point 4 to point 1. D. point 5 to point 1.
Which of the following is the correct formula for calculating the unemployment? rate?
What will be an ideal response?
Which of the following assumptions is crucial to the classical macroeconomic model's assertion that the economy has built-in forces that automatically eliminate unemployment and quickly move the economy to its potential level of real GDP?
A. profit motive B. rigid wages and prices C. flexible wages and prices D. natural rate of unemployment
A total cost curve shows the largest amount of a product a firm can produce with a minimum cost.
Answer the following statement true (T) or false (F)