In the medium run, an increase in the rate of growth of nominal money will cause
A) lower nominal and lower real interest rates.
B) lower nominal interest rates and no change in the real interest rate.
C) an increase in inflation and an increase in output growth.
D) a proportionate increase in inflation.
D
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The structural surplus
A) is legally required to be positive. B) fluctuates over the business cycle. C) is, by definition, equal to the negative of the cyclical deficit. D) equals the actual surplus plus the cyclical surplus. E) is the government budget surplus that would exist if the economy was at full employment.
Suppose you hit a progressive jackpot on a slot machine in a casino in Atlantic City and are given the choice of the following prizes:
Prize 1: $150,000 to be received right away, with three additional payments of $150,000 to be received each year for the next three years. Prize 2: $500,000 to be received right away. If the interest rate is 5 percent, what is the present value of each prize?
The idea that two taxpayers in the same economic circumstances should pay the same level of taxes is known as the
A) vertical-equity principle. B) benefits-received principle. C) horizontal-equity principle. D) ability-to-pay principle.
Suppose Julia and Zach are the only consumers of milk. Julia's demand for milk is defined as QdJulia = 12 - 3P at prices below $4 and zero for prices above $4. Zach's demand for milk is defined as QdZach = 10 - 2P at prices below $5 and zero for prices above $5. In this case, the market demand curve for milk is:
A. upward sloping. B. a downward sloping straight line. C. kinked at a quantity of 2 units. D. kinked at a quantity of 1 unit.