Suppose that personal income is $250 billion. Furthermore, assume that retained corporate earnings are $2 billion, social security taxes are $15 billion, social security benefit checks equal $16 billion, the capital consumption allowance is $32 billion, and corporate taxes amount to $40 billion. What will be the value of net national product in this country?
a. $209 billion
b. $219 billion
c. $283 billion
d. $291 billion
e. $323 billion
d
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In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________
A) supply; rightward B) supply; leftward C) demand; rightward D) demand; leftward
The relation S + (T - G) = I + NX describing the equilibrium of an economy explicitly demonstrates
A) deficit spending by the government reduces either investment and/or net foreign investment. B) deficit spending reduces private saving (assuming net foreign investment remains unchanged). C) as private saving increases net foreign investment must decrease, exports decline. D) as private saving increases the deficit must decline if investment decreases.
Why is efficiency desirable?
A) It results in an equal distribution of income. B) It results in zero unemployment. C) It makes best use of the finite resources we have. D) It is the most politically popular solution.
In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated increase in the money supply will be
a. lower real interest rates and an increase in aggregate demand. b. higher real interest rates and an increase in aggregate demand. c. lower real interest rates and a reduction in aggregate demand. d. higher real interest rates and a reduction in aggregate demand.