Answer the following statements true (T) or false (F)
1) For an open mixed economy, the equilibrium level of GDP is determined where S a + I g + X = T + G.
2) Equal increases in government expenditures and tax collections will leave the equilibrium GDP
unchanged.
3) A $10 billion decrease in taxes will increase the equilibrium GDP by more than would a $10
billion increase in government expenditures.
4) A lump-sum tax causes the after-tax consumption schedule to be flatter than the before-tax
consumption schedule.
1) F
2) F
3) F
4) F
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In which model does there not exist a tradeoff between higher inflation and lower unemployment?
a. monetarist b. real business cycle c. new classical d. classical e. a tradeoff exists in all of the above
Suppose the population of El Campo is 120,000. Of the population 16 years and older, 50,000 are employed, 10,000 have never worked and are not looking for work, 5,000 are not working and are looking for work, and 15,000 are retired and not looking
for work. The labor force equals A) 50,000. B) 55,000. C) 65,000. D) 80,000.
Which of the following is true of home mortgage loans since the late 1990s?
a. Government regulations required homebuyers to make larger down payments in order to obtain a mortgage. b. Traditional fixed-rate, long-term mortgages grew in popularity. c. There was a substantial increase in the volume of mortgage loans extended with little or no down payment. d. High interest rates made it less attractive to lock in to a fixed-rate, long-term loan.
Corn chips and potato chips are substitutes. Good weather that sharply increases the corn harvest would
a. increase consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips. b. increase consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. c. decrease consumer surplus in the market for corn chips and increase producer surplus in the market for potato chips. d. decrease consumer surplus in the market for corn chips and decrease producer surplus in the market for potato chips.