The nominal cost per unit of output rises when production is pushed beyond an economy's potential output.
a. true
b. false
a. true
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Crowding-out
A. refers to the idea that increases in government purchases inevitably cause reductions in some form of private consumption or investment. B. only occurs at full employment levels of National Output. C. is translated into inflation during periods of slack employment. D. does not include loss of leisure on the part of workers employed as a result of government spending.
Which of the following statements best characterizes the Keynesian view of business cycles?
A. Fluctuations in business activity occur in regular and predictable patterns that cannot be altered. B. Business cycles are symptoms of underlying problems and should be dealt with through activist government policies. C. Fluctuations in business activity are to be expected and should be accepted just as changes in the seasons are accepted. D. The appropriate macroeconomic policy can easily eliminate all fluctuations in business activity.
According to economic theory, what is the optimal percentage of GDP to be spent on medical care?
a. Whatever amount we are currently spending b. 10 percent c. 8 percent d. 12 percent e. No widely accepted way to determine the optimal percentage
Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.
If the government provides a subsidy of $500 per ton, then relative to before the subsidy, consumer surplus will ________ by ________ per day.
A. decrease; $500 B. decrease; $1,000 C. increase; $5,000 D. increase; $1,000