Perfectly competitive industry X has constant costs and its product is an inferior good. The industry is currently in long-run equilibrium. The economy now goes into a recession and average incomes decline. The new long-run equilibrium will result in a(n)
A. decrease in output, but not in the equilibrium price of the product.
B. increase in output and in the equilibrium price of the product.
C. increase in output, but not in the equilibrium price of the product.
D. decrease in output and in the equilibrium price of the product.
Answer: C
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Tax expenditures are revenues that
A. are always recouped during tax season. B. only apply to large corporations. C. are needed to get full exemptions. D. are forgone due to preferential tax treatment.
A credit item on the U.S. balance of payments is an item that
a. makes U.S. dollars available to foreigners. b. causes foreigners to use up their U.S. dollars. c. is like an import. d. requires the use of official researchers to offset deficits.
Appropriation
What will be an ideal response?
Suppose that we reduce the federal budget deficit (in billions of dollars) in year 1 from 300 to 200 and in year 2 from 200 to 100. During these two years the national debt will
A. fall by 200. B. stay the same. C. rise by 200. D. rise by 300.