In year 1, the actual budget deficit was $200 billion and the cyclically adjusted deficit was $150 billion. In year 2, the actual budget deficit was $225 billion and the cyclically adjusted deficit was $175 billion. GDP was $1000 billion in year 1 and $1005 billion in year 2. It can be concluded that fiscal policy from year 1 to year 2 was:
A. expansionary.
B. contractionary.
C. proportional.
D. inflationary.
Answer: A
You might also like to view...
Quasiconcave production functions give rise to convex producer choice sets.
Answer the following statement true (T) or false (F)
In order for the balance of payments to balance,
a. the current account balance must equal the capital account balance b. international reserves must flow out of the country c. international reserves must flow into the country d. the current account balance plus the capital account balance plus the net flow of international reserves plus the statistical discrepancy must equal zero e. the current account balance plus the capital account balance plus the net flow of international reserves must be greater than the statistical discrepancy
Consider an unregulated monopoly in Figure 13.2. At the firm's profit maximizing output level, its total revenue is:
A. $1,000,000. B. $200,000. C. $800,000. D. $600,000.
You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80¢, and 200,000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60.
(i) The Commission wants to ensure that the subway has enough excess capacity to handle any extra demand that might occur during an economic decline. If a recession lowered area incomes by 5%, how many additional seats per week would the subway need? (ii) The Commission has just approved a subway price increase of 10¢ per ride. The Commission wants to know if it can use the opportunity to retire two aging subway cars that each provide 8,000 seats weekly. When the price hike goes into effect, can neither, one, or both cars be retired?