When current government expenditures exceed current tax revenues and the economy is achieving full employment:
A. the cyclically adjusted budget has neither a deficit nor a surplus.
B. the cyclically adjusted budget has a deficit.
C. fiscal policy is contractionary.
D. the cyclically adjusted budget has a surplus.
B. the cyclically adjusted budget has a deficit.
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The Federal Reserve CANNOT do one which one of the following?
A. Change the tax rate on profits B. Change the discount rate C. Change the required reserve ratio D. Change margin requirements
Economics is a social science rather than a “hard” science like physics because
A. economists abstract from reality when creating their theories. B. economics is easier to study than physics. C. economists must explain their theories to policy makers who lack formal mathematical training. D. economists study human behavior, which is affected by an unpredictable and vast range of influences.
New Keynesian theories of efficiency wages imply
a. voluntary unemployment. b. real wage rigidity. c. changes in unemployment represent changes in the natural rate of unemployment. d. market clearing in the labor market in the long-run. e. None of the above
Figure 5-6
A shift in the budget line in Figure 5-6 from AB to AC indicates
a.
the price of wine coolers has risen.
b.
income has increased.
c.
the price of beer has fallen.
d.
the price of wine coolers has fallen.
e.
All of the above are correct.