Assume the government decides to decrease taxes and to finance the expected budget deficit with borrowing in the real credit market. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real goods market with aggregate supply shifting to the left.
c. Start the analysis in the real goods market with aggregate supply shifting to the right.
d. Start the analysis in the real credit market with demand for real credit shifting to the left.
e. Start the analysis in the real credit market with demand for real credit shifting to the right.
.E
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GDP ignores all of the following EXCEPT
A) household production. B) changes in the environment that occur in the production of output. C) the value of leisure time. D) products produced in other countries that are sold in the United States.
Economic expansions might lead to inflation because an expansion leads to
A) a decrease in the unemployment rate, which decreases wages. B) an increase in the unemployment rate, which decreases wages. C) an increase in the unemployment rate, which increases wages. D) a decrease in the unemployment rate, which increases wages.
The above table shows the market shares for all the landscaping services in a suburban area. Which of the following mergers would cause the greatest increase in the four-firm concentration ratio?
A) A and B B) D and E C) E and F D) six of the smallest firms
The government imposes a price floor on wheat that is below the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest
A. using rationing coupons that can be resold. B. that no rationing system will be necessary. C. using a queuing system to compensate for the excess demand. D. using rationing coupons that cannot be resold.