Suppose a small closed economy has GDP of $5 billion, consumption of $3 billion, and government expenditures of $1 billion. Then investment and national saving are both $1 billion
a. True
b. False
Indicate whether the statement is true or false
True
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The tax interaction effect is the _________ in excess burden in the labor market stemming from the _______ in real wages caused by a Pigouvian tax.
A. increase; increase B. reduce; reduction C. increase; reduction D. reduction; increase
Some demand curves have constant elasticity everywhere
a. True b. False
If there are no profits in competitive equilibrium, why do firms produce? How can they stay in business?
What will be an ideal response?
Economic fluctuations are defined as
a. alternating periods of significant GDP growth and decline. b. events only encountered in developing countries. c. periods of stable economic growth. d. alternating periods of unemployment falling above and below zero.