If the total budget deficit is $200 billion and the deficit at full employment is $120 billion, then the
A. Structural deficit is $80 billion.
B. Cyclical deficit is $120 billion.
C. Cyclical deficit is $80 billion.
D. Structural deficit is $320 billion.
Answer: C
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A policy maker who is concerned that the unemployment rate is too high would ________.
A. use tariffs to reduce imports and increase net exports B. increase the minimum wage C. decrease government spending D. increase taxes
The fraction of an increase in income that is saved is referred to as the _____
a. marginal propensity to save b. average propensity to save c. marginal propensity to consume d. average propensity to consume e. saving-consumption ratio
The consumption function
a. illustrates the relationship between real disposable income and real consumption spending b. illustrates the relationship between the price level and real consumption spending c. is the relationship between productivity and real consumption spending d. shows how real consumption increases when real disposable income decreases e. illustrates the relationship between real consumption spending and employment
If the reserve ratio is .05, the money multiplier can be as high
A. as 10. B. as 50. C. as 5. D. as 20.