According to Keynesian economics, what impact would a balanced budget amendment to our constitution have on our national economy?
What will be an ideal response?
A balanced budget amendment would destabilize the economy. It would make the business cycle more pronounced exacerbating the problem of unemployment in particular. This is because as the economy contracts, the deficit will rise due to the presence of the automatic stabilizers. Attempts to reduce the deficit, by raising taxes and/or curbing government spending, will reduce total spending (aggregate demand) further, worsening the recession.
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Suppose the U.S. price level is 150, the German price level is 450, and the Swiss price level is 600
If exchange rates are 3 euros/dollar and 4 francs/dollar, then purchasing power parity ________ between Germany and the United States and ________ between Switzerland and the United States. A) does not hold; holds B) holds; does not hold C) does not hold; does not hold D) holds; holds
A business cycle is
A) the pattern of short-run upward and downward movements in total output. B) the increase in consumer spending that accompanies an increase in disposable income. C) the cyclical change in the nation's balance of trade. D) the cyclical movement in the interest rates.
Which of the following is the best example of "depreciation"?
A) An individual worker becoming tired at the end of an eight-hour work day. B) The notion that individuals obtain less utility from paying taxes than giving to charities. C) A truck used by a pizzeria to make deliveries is worth less at the end of one year. D) A rise in prices depreciating the value of consumers' real incomes.
Income per worker has been
A) converging in both the rich countries and the poor countries. B) converging in the rich countries, but not converging in the poor countries. C) converging in the poor countries, but not converging in the rich countries. D) converging in neither the poor nor the rich countries.