The president wishes to increase spending for education by $4 billion but also maintain a balanced budget. Therefore, taxes will also be increased by $4 billion. What will happen to GDP?
a. It will increase.
b. It will remain the same.
c. It will decrease.
d. It's impossible to know without the multiplier.
a
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In the Keynesian model, interest rates are determined by
A) aggregate demand and aggregate supply. B) saving and investment. C) the demand for and supply of money. D) the velocity of money.
Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy? a. Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. b. Their positive statements help
us understand the good results of a policy change, and their normative statements help us understand the negative results. c. We really do not have to worry about them since trained economists never make normative statements. d. Economists are always making assumptions, and policy should not be based on assumptions.
Along a straight-line downward-sloping demand curve, a decrease in the market price of a good:
A) will cause no change in consumer surplus. B) will increase consumer surplus. C) will decrease consumer surplus. D) may either decrease or increase consumer surplus.
According to the graph shown, if the market goes from equilibrium to having its price set at $10 then:
A. $12 gets transferred from consumer to producer in surplus. B. all producer surplus lost is gained by consumers. C. all consumer surplus lost is gained by producers. D. $12 gets transferred from producer to consumer in surplus.