Suppose an economy has a balanced federal budget, and a favorable supply shock hits the economy. Tax revenues will ________ and expenditures on transfer payments will ________, resulting in a budget ________.
A. fall; increase; deficit
B. increase; increase; surplus
C. fall; fall; deficit
D. increase; fall; surplus
Answer: D
You might also like to view...
In the case of public goods, the ability to free ride on the efforts of others is an example of
A) low transactions costs. B) insecure property rights. C) government subsidization. D) mutual assurance.
Explain why movie theaters charge more for evening performances than for matinees.
What will be an ideal response?
Roger pays $20 per month to access unlimited movies on Netflix. In this scenario, the streaming of movies would best be classified as a: a. merit good
b. club good. c. public good. d. private good.
Income taxes are an automatic stabilizer because when income rises, ceteris paribus, tax receipts
A. Fall as taxpayers experience bracket creep. B. Rise because taxes are computed on the basis of income. C. Fall because income taxes are regressive. D. Fall because automatic stabilizers work against the cyclical movements of the GDP.