Answer the next question using the following budget information for a hypothetical economy. Assume that all budget surpluses are used to pay down the public debt. Government SpendingTax RevenuesGDPYear 1$450$425$2,000Year 25004503,000Year 36005004,000Year 46406205,000Year 56805804,800Year 66006205,000If year 1 is the first year of this nation's existence and year 4 is the present year, the public debt as a percentage of GDP in year 4 is
A. 3.9%.
B. 2.5%.
C. 1.39%.
D. 7.5%.
Answer: A
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From 1995 to 2001, the debt—GDP ratio in the United States
A) steadily fell. B) steadily increased. C) was about constant. D) fell from 1995 to 1998, then rose sharply.
To efficiently manage traffic on a system of bridges,
A. the more-crowded bridges should have lower tolls, so that they are affordable. B. the tolls should be equal for all bridges, so that people can choose the most convenient routes. C. tolls should be higher on more-crowded bridges and lower on less-crowded bridges. D. there should be no tolls on bridges, because people should not have to pay to drive to their jobs.
If the price of used automobiles increased dramatically relative to all other prices, and the demand for all goods remained the same, which of the following would most likely occur?
a. The GDP price index would decrease less than the CPI. b. Both the GDP price index and the CPI would decrease. c. The GDP price index would increase more than the CPI. d. The CPI would increase more than the GDP price index. e. Both the GDP price index and the CPI would increase by the same amount.
Refer to the information provided in Figure 23.12 below to answer the question(s) that follow.
Figure 23.12Refer to Figure 23.12. What is the equation for aggregate expenditure AE1?
A. AE1 = 600 + 0.4Y. B. AE1 = 1,000 + 0.6Y. C. AE1 = 1,000 + 0.5Y. D. AE1 = 400 + 0.4Y.