Will it take a smaller amount of government spending to increase the level of national income if the government balances its budget or if it runs a budget deficit? Explain
It will take a smaller amount of government spending to achieve this goal if the government runs a budget
deficit. If it wants to balance the budget, it must match its expenditures with tax increases, since the
balanced budget multiplier equals 1 . If it is willing to run a budget deficit, then it can raise spending by a
smaller amount, since the effect of the extra government spending will not be offset (or will be only
partially offset) by an increase in taxes.
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The best definition of economics is
A) how choices are made under conditions of scarcity. B) how money is used. C) how goods and services are produced. D) how businesses maximize profits.
The loanable funds market brings together savers and borrowers to determine the
a. marginal rate of return on investment b. rate of time preference c. market rate of interest d. marginal resource cost of investment e. marginal revenue product of investment
Which of the following was not a major area addressed by the Dodd-Frank Bill (i.e., Wall Street Reform and Consumer Protection Act of 2010)
a. Reducing systemic threats to the U.S. financial system. b. Solving the "too small to survive" problem in the U.S. financial system. c. Improving credit rating agency performance and accountability. d. Preventing spillover effects in the financial industry.
Firms in an economy with high labor costs have an incentive to use more ________ techniques.
A. capital-intensive B. labor-dependent C. capital-saving D. labor-intensive