Suppose that the federal budget is balanced when GDP is at potential GDP. If equilibrium GDP falls below potential
A) this will result in a current budget deficit.
B) the cyclically adjusted budget will be balanced.
C) government transfer payments will be rising and tax receipts will be falling.
D) All of the above are correct.
Answer: D
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A variable that tends to move later than aggregate economic activity is called
A) a leading variable. B) a coincident variable. C) a lagging variable. D) an acyclical variable.
Which of the following is NOT a factor of production?
A.) A toll-bridge across a lake. B.) The money hidden in an old basement. C.) A wrecking ball used to tear down old buildings. D.) The CEO of a large corporation.
Assume the demand curve for skirts in Europe is P = 100 -QE (or Qe=100 - P), while the U.S. demand is P = 100 -¼QUS. (or Qus = 400 - 4P). Over the range of prices, which demand is more price elastic?
A. Demand in the United States is more elastic. B. Demand in the United States and Europe has the same elasticity for any price level. C. It depends on the price level. D. Demand in Europe is more elastic.
An increase in the cost of building materials will generally lead to a _______ in the ______ curve for new homes.
Fill in the blank(s) with the appropriate word(s).