Assume the economy is at full employment and prices are reasonably stable. If the government wants to increase spending for public schools, which of the following policies will have the least inflationary impact?
A. An increase in taxes by an amount greater than the increase in spending.
B. An increase in taxes equal to the increase in spending.
C. An increase in taxes by an amount smaller than the increase in spending.
D. No change in taxes when expenditures increase.
Answer: A
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The existence of a shortage means
A) people are buying more than is available. B) people cannot buy as much as they plan to buy at the prevailing money price. C) prices are too high. D) there is not enough to satisfy everyone's needs.
In the equation Y = C + I + G,
a. only I is an exogenous variable determined by factors outside the model. b. only G is an exogenous variable determined by factors outside the model. c. C is an endogenous variable determined by factors inside the model. d. I and G are exogenous variables determined by factors outside the model. e. A, b, and c
A key reason that the value of the dollar did not change relative to the Chinese yuan in the early 2000s was:
A. the U.S. Federal Reserve bought dollars to keep the value of the dollar from falling. B. the Chinese central bank sold dollars to keep the value of the dollar from rising. C. trade was balanced between the two nations. D. the Chinese central bank bought dollars to keep the value of the dollar from falling.
Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $100, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit?
What will be an ideal response?