When government tax revenues change automatically and in a countercyclical direction over the course of the business cycle, this is an example of:
A. the cyclically adjusted budget.
B. impounding.
C. money creation.
D. built-in stability.
Answer: D
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The demographic transition refers to the:
A) decrease in fertility and number of children per family that many societies undergo as they transition from industry to agriculture. B) decrease in fertility and number of children per family that many societies undergo as they transition from agriculture to industry. C) increase in fertility and number of children per family that many societies undergo as they transition from agriculture to industry. D) increase in fertility and number of children per family that many societies undergo as they transition from industry to agriculture.
There is only one firm in a small island country. The firm produced 1,000 units of Good X during a particular year out of which it could sell 900. If each unit of the good sells for $500, what is the gross domestic product of the country?
A) $150,000 B) $450,000 C) $40,000 D) $500,000
Interest rate parity occurs when
A) interest rates are equal across nations. B) interest rate differentials are always maintained across nations. C) interest rates no longer affect the exchange rate. D) prices are equal across nations when exchange rates are taken into account. E) the interest rate in one currency equals the interest rate in another currency when exchange rate changes are taken into account. The figure above shows the demand curve for dollars in the foreign exchange market.
If firms are more pessimistic and believe that future profits will fall and remain weak for the next few years, then
A) investment spending will remain unaffected. B) investment spending will rise and then fall. C) investment spending will rise. D) investment spending will fall.