For an economy starting at potential output, a decrease in investment in the short run results in a(n):
A. increase in potential output.
B. recessionary output gap.
C. expansionary output gap.
D. decrease in potential output.
Answer: B
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A decrease in Social Security payments will
A) decrease export spending. B) decrease investment spending. C) decrease government spending. D) decrease consumption spending.
If the United States has a net export deficit, which of the following must be true? (Assume that the capital account is zero and net transfers are zero.)
A) Net foreign investment must be negative as well. B) Domestic private saving must be less than net foreign investment. C) Domestic public saving must be less than net foreign investment. D) The balance on the financial account must equal the balance on the current account.
In-kind transfer programs such as Medicaid have increased more rapidly than other welfare programs over the last decade
a. True b. False
Under fair-return pricing, a regulated natural monopoly will earn zero economic profit
a. True b. False Indicate whether the statement is true or false