The structural deficit is determined by established expenditure-transfer policies and tax rates and is independent of the current level of GDP.
Answer the following statement true (T) or false (F)
True
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Why do we analyze the steady state in the Malthusian model?
A) Because that is all we know how to do. B) Because there is a non-steady state that is not interesting. C) Because this is the Pareto optimum. D) Because the long run equilibrium of the model is the steady state.
The closest thing in the real world to a negative income tax is the _____
a. AARP b. EITC c. TANF d. AFDC
Which of the following statements is TRUE about the interest rate effect?
A) The interest rate effect is why the aggregate demand curve is upward sloping. B) A lower price level lowers the interest rate, which causes businesses and consumers to increase their desired spending. C) A higher price level lowers the interest rate, which causes business and consumers to increase their desired spending. D) Expenditures will change as a result of a change in the real value of money balances when there is a change in the price level.
When someone is served pizza and soda for dinner, it is typical behavior to eat some pizza, then drink some soda, then eat more pizza, and so on, until the person stops consuming both. How can this behavior be explained using economic concepts?
A. The individual is revealing that he can't decide whether he gains more utility from pizza or from soda. B. People tend to act irrationally around food, and the concept of utility maximization cannot be applied. C. The person eats pizza until his marginal utility for pizza is lower than it is for soda, then he switches to soda. D. The concept of unlimited wants says he will never tire of eating pizza and soda.