If the federal budget has an actual budget surplus of $75 billion, but a cyclically adjusted budget surplus of $50 billion, then the economy must be above potential real GDP
Indicate whether the statement is true or false
TRUE
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If the price of a pizza increases and the demand curve for pizza does not shift, then the consumer surplus from pizza will ________
A) increase B) decrease C) equal the producer surplus if the market produces the efficient quantity of pizza D) remain the same
When the MPC = 0.80, the multiplier is
A) 5.00. B) 0.25. C) 4.00. D) 7.50.
Research in the performance of developing nations with exchange rate pegs has shown that:
A) fixed exchange rates are 100% effective in curbing inflation and preventing hyperinflation. B) fixed exchange rates are 100% ineffective in curbing inflation and preventing hyperinflation. C) floating exchange rates are more effective in curbing inflation and preventing hyperinflation. D) fixed exchange rates are neither necessary nor sufficient to curb inflation and prevent hyperinflation.
Which of the following statements is consistent with the rational expectations hypothesis?
A. When it comes to making personal economic decisions, people always behave in a rational manner. B. When it comes to making personal economic decisions, people rarely behave in a rational manner. C. Every person in the economy is always correct in her predictions about current and future policy changes. D. People combine the effects of past policy changes on important economic variables with their own judgment about the future effects of current and future policy changes.