An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is the opportunity cost of an apple?
A) 4/5 of a banana B) 5/4 of a bananas C) 4 bananas D) 1 apple E) None of the above answers is correct.
Suppose the income tax rate is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on all income above $70,000
Family A has income of $82,000 while Family B has income of $37,000. What are the marginal tax rates faced by the two families?
James used $250,000 from his savings account that paid an annual interest of 15% to purchase a hardware store. After one year, James sold the business for $320,000 . What is his economic profit?
a. $320,000 b. $70,000 c. $282,500 d. $32,500
Congress is debating whether to raise taxes by $100 billion or decrease spending by $100 billion in order to eliminate a budget deficit. Which action will have the larger effect on equilibrium GDP?
A. The increase in taxes B. The decrease in spending C. The effects will be equal D. Not possible to determine without knowing the multiplier