Federal spending on elementary and secondary education rose from $39.7 billion to $40 billion in 2007. Inflation at the time was 2.5%. Explain what happened to real spending on education in 2007.
What will be an ideal response?
The spending increase in 2007 was 0.8%; however, after subtracting the inflation rate of 2.5%, real spending actually declined by 1.7% (0.8% ? 2.5% = ?1.7%).
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The marginal rate of technical substitution of labor for capital measures
a. the amount by which capital input can be reduced while holding quantity produced constant when one more unit of labor is used. b. the amount by which labor input can be reduced while holding quantity produced constant when one more unit of capital is used. c. the ratio of total labor to total capital. d. the ratio of total capital to total labor.
Suppose that the government wishes to finance a one-year war. GDP in the nation before the war is $1,000 . and there are no taxes, no government spending, and no private saving. Private consumption is $1,000 . The government chooses to finance the war by selling Treasury bonds totaling $100 at 10 percent interest. The result is that private consumption becomes
a. $100 b. $900 c. $990 d. $1,000 e. $1,100
If the government decides to build a new highway, the first step would be to conduct a study to determine the value of the project. The study is called a
a. budget analysis. b. project analysis. c. reimbursement analysis. d. cost-benefit analysis.
At his current level of consumption, Evan gets twice as much marginal utility from an additional bottle of water as that from an additional bottle of soda. If the price of soda is $1.00 per bottle, then Evan is maximizing utility if the price of a bottle of water is:
A. $1.50 B. $2.00 C. $0.50 D. $1.00