Answer the following statements true (T) or false (F)
1. United States has had little success with the surplus aspect of balancing the budget over the period of a business cycle.
2. The full-employment balanced budget always shows a surplus.
3. A deficit budget adds to the national debt.
4. The United States will face bankruptcy if the national debt ever reaches a figure higher than its GDP.
5. The government’s ability to repay the national debt is governed only by the total assets of the economy.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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When interest rates rise, the transactions demand for money usually
A) decreases. B) increases. C) decreases initially and then increases to the original position. D) does not change.
When a price is presented in context to another, a firm is
A) discriminating. B) maximizing profits. C) marking up. D) framing.
The crowding-out effect implies that restrictive fiscal policy will
a. increase aggregate demand and employment. b. lead to a significant increase in the natural rate of unemployment. c. be highly effective against inflation. d. reduce real interest rates.
The supply curve of a natural resource like oil has a positive slope because
A. the supply becomes closer to exhaustion as demand rises. B. it becomes more costly to find and develop supplies as demand rises. C. rents rise as output increases. D. indirect taxes rise with output.