The following is budget information for a hypothetical economy. All data are in billions of dollars.YearGovernment SpendingTax RevenuesGDP1$800$825$4,00028508504,20039008754,35049509004,50051,0009254,600Refer to the above data. The budget deficit was $75 billion in:
A. year 5.
B. year 2.
C. year 3.
D. year 4.
Answer: A
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In the short-run, we assume that the money prices of goods and services are
A) temporarily fixed. B) permanently fixed. C) allowed to fluctuate. D) equal to long-run prices. E) fully employed.
A perfect monopoly:
A. refers to a single seller. B. can extract all consumer surplus from a market. C. controls 90 to 100 percent of the market for a product. D. would produce efficient outcomes.
According to classical economists, if we use the quantity theory of money equation P = MV / Q, and the growth rate of M equals the Q growth rate,
a. the price level increases b. the price level decreases c. the price level remains unchanged d. velocity is necessarily increased e. M1 is decreased
Which of the following statements is correct?
a. The interest rate that is usually reported is the interest rate that has been corrected for inflation. b. The supply of, and demand for, loanable funds depend on the real (rather than nominal) interest rate. c. If the nominal interest rate has decreased and the real interest rate has also decreased, then the inflation rate must have decreased as well. d. All of the above are correct.