In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause
A. an inflationary gap if the economy was initially operating below full employment.
B. an increase in real GDP with stable prices if the economy was below full employment.
C. an inflationary gap if the economy was initially operating at full employment.
D. a reduction in real GDP with falling prices if the economy was below or at full employment.
Answer: D
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Which of the following would reduce the labor force participation rate, all else equal?
A) an increase in the working-age population B) an increase in the unemployment rate C) a decrease in the unemployment rate D) an increase in the number of people in the labor force
Jim recently graduated from college. His income increased tremendously from earning $500 . a year to $60,00 . a year. Jim decided that instead of renting he will buy a house. This implies that
a. Houses are normal goods for Jim b. Houses are inferior goods for Jim c. Renting and Owning are complementary for Jim d. Need information on the price of houses
An increase in the price of butter, a substitute good, would be most likely to cause
a. a rightward shift of the demand curve for margarine b. a leftward shift of the demand curve for margarine c. the quantity of margarine demanded to increase d. the quantity of margarine demanded to decrease e. a decrease in the price of margarine
The marginal units of action choice X:
A. are the last ?X units and tend to generate the greatest amount of marginal benefits. B. are the last ?X units and tend to generate the smallest amount of marginal costs. C. are the initial ?X units, where ?X represents the change in the units of X. D. are the last ?X units, where ?X is the smallest amount you can add or subtract.