If the growth rate of real GDP rises from 3% to 4% per year, then the number of years required to double real GDP will decrease from
A) 23.3 years to 17.5 years.
B) 28.0 years to 21.0 years.
C) 11.2 years to 10.8 years.
D) 23.3 years to 20.6 years.
Answer: A
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The principal-agent problem is a problem
A) of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat. B) that exists when a person (principal) has more information about the task than the agent he hires to perform the task. C) caused by agents pursuing their own interests rather than the interests of the principals who hired them. D) caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way.
When the Social Security system begins running a deficit, the bonds in the trust fund will be drawn down. The funds to redeem these bonds will have to come from
a. higher taxes, spending reductions in other programs, or additional government borrowing. b. the surplus funds deposited in governmental banking accounts. c. equity capital being liquidated. d. the sale of private equities and securities that the government has been purchasing with the funds.
Other things being equal, an expansion of commercial bank lending:
A. is desirable during a period of demand-pull inflation. B. increases the money supply. C. reduces the money supply. D. changes the composition, but not the size, of the money supply.
Refer to the graph below. Critics of supply-side economics would argue that tax rates are currently between:
A. b and d and that a decrease in tax rates will decrease tax revenues
B. 0 and b and that a decrease in tax rates will decrease tax revenues
C. 0 and b and that a decrease in tax rates will increase tax revenues
D. b and d and that a decrease in tax rates will increase tax revenues