A direct cost of public debt is:
A. the interest the government has to pay to the people it has borrowed from.
B. it allows the government to be flexible when something unexpected happens.
C. it can pay for investments that will lead to economic growth in the long run.
D. All of these are costs to holding public debt.
A. the interest the government has to pay to the people it has borrowed from.
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During a business cycle recession, it is very likely that real GDP will
A) be greater than potential GDP. B) be less than potential GDP. C) equal nominal GDP and equal potential GDP. D) exceed nominal GDP. E) equal nominal GDP but not equal potential GDP.
If a positive externality were present in a market, the social benefit curve would be:
A. the same as the private demand curve. B. above the private demand curve. C. below the private demand curve. D. Cannot say without more information.
Assume that this graph illustrates a perfectly competitive labor market.
If the supply of person-hours in this market shifts to the right, then the equilibrium wage will ________ and the equilibrium number of person-hours will ________.
A. fall; decrease B. increase; increase C. fall; increase D. stay the same; increase
Which of the following categories accounted for the largest percentage of total federal government expenditures in recent years?
A. income security B. national defense C. education and health D. interest on the national debt