If the federal government has a budget surplus in a given year, the national debt will:
A. remain constant.
B. increase.
C. increase only if output is below potential output.
D. decrease.
Answer: D
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Suppose that the current equilibrium price of silver is $20 per ounce. If silver is produced under conditions of perfect competition and the industry is in long-run equilibrium, the average total cost of producing silver:
A. exceeds $20 per ounce. B. is less than $20 per ounce. C. is $20 per ounce. D. is indeterminate.
Typically, increasing the difference between the discount and federal funds rates causes
A. high corporate profits. B. no change in interest rates. C. a boom in the economy. D. an increase in market interest rates.
A random adverse event is an event that has a(n) ________ probability and is associated with a ________ outcome.
A) known; positive B) known; negative C) unknown; negative D) unknown; positive
A temporary tax cut is not likely to be effective in stimulating aggregate demand if: a. the tax cut is large
b. the MPC is relatively high. c. the economy experiences a contractionary gap. d. the short-run aggregate supply curve is relatively flat. e. people based consumption decisions on their level of permanent income.