Assume that the economy is in a recession and there is a budget deficit. A strict balanced-budget amendment that would require the federal government to balance its budget during a recession would be:
A. expansionary and worsen the effects of the recession.
B. expansionary and counter the effects of the recession.
C. contractionary and worsen the effects of the recession.
D. contractionary and counter the effects of the recession.
Answer: C
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Suppose per capita real GDP grows by 7% per year. Based on the Rule of 70, approximately how many years will it take for the level of per capita real GDP to double?
A) 7 years B) 10 years C) 4.9 years D) none of the above
When lenders are unable to get good information about the worthiness of a project the lender has the problem of
A) adverse selection. B) moral selection. C) moral hazard. D) adverse hazard.
The time and invested funds involved in starting a lawn-cutting business address the economic concept of
A) the marginal principle. B) the principle of diminishing returns. C) opportunity cost. D) the real-nominal principle.
The oligopolistic model in which firms produce exactly the same results as would exist if a monopolist controlled the entire industry is called the ________ model.
A. price leadership B. Cournot C. collusion D. maximin strategy