Which of the following is NOT an assumption of the classical model?
A. People are motivated by self-interest.
B. Government spending is necessary to achieve economic stability.
C. Wages and prices are flexible.
D. Absence of money illusion.
Answer: B
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The largest component of U.S. federal spending that contributes to the U.S. government budget deficit is
A. salaries of government employees. B. interest expenses. C. entitlements. D. military spending.
An aggregate supply curve represents the relationship between the:
A. Price level and the buying of real domestic output B. Price level and the production of real domestic output C. Real domestic output bought and the real domestic output sold D. Price level that producers are willing to accept and the price level buyers are willing to pay
If a tax cut of $12 billion causes real GDP to increase by $36 billion, then the tax multiplier is
A. 2. B. 3. C. 4. D. 5.
Price discrimination is always illegal
a. True b. False Indicate whether the statement is true or false