Under what conditions will the official measure of the budget deficit be greater than, less than, or equal to the correct measure of the budget deficit
What will be an ideal response?
The official measure of the deficit is: iB + G - T.
The correct measure of the deficit is: rB + G - T.
The difference between the two measures equals ?B; that is, the official measure overstates the correct measure by that amount. The official measure will be greater when inflation is positive. The two measures will be equal when inflation is zero. And finally, the correct measure will be greater when inflation is negative.
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Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.
Answer the following statement true (T) or false (F)
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model? a. The quantity of real loanable
funds per time period rises and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls and nominal value of the domestic currency remains the same. c. The quantity of real loanable funds per time period rises and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.
Although not included in the M1 definition of money, ______ are part of the M2 definition of currency.
a. traveler’s checks b. coins c. checkable deposits d. money market mutual fund shares
The Stolper-Samuelson theorem predicts that free trade between the United States, a capital-abundant country, and Mexico, a labor-abundant country, would ultimately result in
A. lower wages in both countries. B. lower wages in Mexico and higher wages in the United States. C. higher wages in Mexico and lower wages in the United States. D. higher wages in both countries.