If the U.S. government were to run a substantial budget deficit, what would be the effects on the economy under the new classical view?
According to the new classical view, people will not perceive the bonds they hold as wealth. The tax cut generated by deficit financing will be saved to pay for future taxes. Since future taxes are anticipated, the increase in the demand for loanable funds is offset by an increase in supply (savings). The interest rate will remain the same, and therefore, investment, the capital stock, and foreign investment do not change.
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An upward-sloping supply curve suggests that producers
A) sell less at higher prices. B) sell more at lower prices. C) plan to sell more at a given, higher price. D) ignore marginal costs of production, and only focus on the demand for their product.
The demands for labor and other input factors are called
A) derived demands, because the demand for these inputs depends on the demand for goods and services they are employed to produce. B) developed demands, because the demand for these inputs is developed from an analysis of the costs of advertising products. C) indirect demands, because the demand for these inputs is indirectly related to the costs of advertising products. D) reverse demands, because the demand for these inputs varies inversely with the demand for goods and services they are employed to produce.
If two workers can produce 22 units of output, and the addition of a third worker increases output to 30 units, the marginal product of the third worker is:
a. 8 units. b. 10 units. c. 22 units. d. 30 units.
An economy with a government planning commission that provides explicit instructions for resource allocation is an example of
a. a command economy b. a communal economy c. a traditional economy d. a market economy e. market socialism