It is impossible for the government to maintain a balanced budget while using fiscal policy to eliminate a recessionary gap.
Answer the following statement true (T) or false (F)
False
An increase in government spending paid for by a tax increase of equal size shifts aggregate demand to the right through the balanced budget multiplier. Therefore, it may be difficult, but not impossible, to maintain a balanced budget while using fiscal policy to eliminate a recessionary gap.
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The measurement of GDP handles underground production by
A) including the amount produced in this sector of the economy in exactly the same way that all other production is included. B) omitting it because underground production is unreported to the government by the people involved. C) adding it at fixed prices that change only infrequently. D) adding an estimate of it because it is difficult to precisely measure underground production. E) omitting it because, being illegal, it has no effect on the nation's total production.
Commitments to make or receive payments in the future are made easier by money's function as a _____
a. unit of account b. store of value c. medium of exchange d. form of barter e. commodity
Variability in prices for grains tends to be _____ (less than, greater than) variability in price for beef and hogs.
a. Less than b. Greater than
If the interest rate is 11%, $1500 received at the end of 12 years is worth how much today?
a. 500(1+.11)12 b. 500/(1 + .11)12 c. 500/(1 + 11)12. d. 500