If output is greater than planned aggregate expenditure, there will be
A. an unplanned decrease in inventories.
B. no change in inventories.
C. an unplanned increase in inventories.
D. a planned increase in inventories.
Answer: C
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Suppose the government of South Island fixes the exchange rate of its currency, the Islandia, in terms of the U.S. dollar. Initially the exchange rate is set at $1 per Islandia. Later the government changes the exchange rate to $2 per Islandia. This is an example of a(n):
A. appreciation B. devaluation C. depreciation D. revaluation
The idea of opportunity cost suggests that the cost of a particular choice should be measured by the
a. price of the good chosen b. price of the good divided by income c. value of the best alternative sacrificed d. amount of the good consumed e. sum of the costs of all foregone opportunities
Which nation's taxation is the highest percentage of the nations' GDP?
a. Australia b. United States c. Germany d. Netherlands e. Sweden
Under a balanced budget policy, a sharp decline in GDP will cause
a. no serious budget changes. b. a tax cut or an increase in expenditures. c. a tax increase or expenditure cut. d. tax receipts to exceed government expenditures.