How does the tax wedge influence potential GDP?
What will be an ideal response?
By decreasing employment, the tax wedge lowers potential GDP.
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Suppose output is $35 billion, government purchases are $10 billion, desired consumption is $15 billion, and desired investment is $6 billion. Net foreign lending would be equal to
A) -$4 billion. B) -$2 billion. C) $2 billion. D) $4 billion.
Figure 10-1
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If the profit-maximizing firm depicted in Figure 10-1 is perfectly competitive, how much output should it produce?
A. A B. B C. C D. D
What did the sound finance approach to fiscal policy use to support its view?
A. Keynesian economics B. A history of successful procyclical fiscal policy C. The Ricardian equivalence theorem D. The functional finance view
A weighted output maximization could serve as a reasonable pricing guideline
Indicate whether the statement is true or false