What is economic growth and how do we calculate its rate?
What will be an ideal response?
Economic growth is the sustained expansion of production possibilities. It is measured by the increase in real GDP over a given time period. The economic growth rate is the annual percentage change in real GDP.
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Temporary tax cuts would cause
A) the AA-curve to shift left. B) the AA-curve to shift right. C) the DD-curve to shift left. D) the DD-curve to shift right. E) a shift in the AA-curve, although the direction is ambiguous.
What is the value of disposable income?
| Consumption expenditures | $4,150 |
| Federal government purchases of goods and services | 850 |
| State and local government’s purchases | 331 |
| Investment | 751 |
| Proprietors income | 150 |
| Compensation of employees | 4,080 |
| Corporate profits | 134 |
| Taxes on corporate profits | 23 |
| Rental income | 31 |
| Capital consumption allowance | 295 |
| Indirect business taxes | 130 |
| Net interest | 147 |
| Exports | 300 |
| Imports | 320 |
| Undistributed corporate profits | 111 |
| Transfer payments | 66 |
| Personal taxes | 45 |
| Dividends | 0 |
| Income Earned from the Rest of the World | 252 |
| Income Earned by the Rest of the World | 1,347 |
| Social insurance taxes | 222 |
| Statistical discrepancy | 5 |
A. $3,618
B. $4,795
C. $3,727
D. $4,207
E. $4,017
Why isn't it correct to say that people who are risk averse avoid risk?
What will be an ideal response?
Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP is $400 billion while the actual GDP is $200 billion, the cyclically adjusted budget deficit is:
A. $40 billion.
B. zero.
C. $60 billion.
D. $20 billion.