If the price of inputs rises and personal income taxes rise:
a. Price index rises, and real GDP falls.
b. Price index rises, and the change in real GDP is uncertain.
c. The change in price index is uncertain, and real GDP falls.
d. Price index falls, and real GDP rises.
e. Price index falls, and real GDP falls.
.C
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A budget surplus exists when
a. Tax receipts < government expenditures + transfers. b. Tax receipts > government expenditures + transfers. c. Government expenditures ? transfers > tax receipts. d. Government expenditures > transfers + tax receipts.
Real income will rise from one year to the next if nominal income:
A. Falls and the price level falls faster B. Rises and the price level rises faster C. Falls and the price level rises D. Falls faster than the price level
The principle that consumers and firms optimize
A) is not helpful because some economic agents may behave irrationally. B) is helpful because it allows us to analyze how economic agents respond to changes in their environment. C) only applies to perfectly competitive markets. D) is helpful because it determines the available technology.
Refer to Exhibit 15-5. At short-run equilibrium, this economy is in a(n) ___________________ gap. An economist who believes that the economy is self-regulating would assert that _____________________________.
a. inflationary; the SRAS curve will shift leftward sufficiently to close the inflationary gap b. recessionary; the SRAS curve will shift rightward sufficiently to close the recessionary gap c. inflationary; the AD curve will shift leftward sufficiently to close the inflationary gap d. recessionary; the AD curve will shift rightward sufficiently to close the recessionary gap