During an expansion, which of the following occur because of automatic stabilizers?
I. Income tax revenues tend to rise.
II. Government transfer payments tend to rise.
III. The government's budget deficit tends to fall or its budget surplus tends to rise.
IV. They tend to amplify the rise in real GDP.
A) I and III only
B) I, II, and III only
C) I, III, and IV only
D) I, II, III, and IV
Ans: A) I and III only
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The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing rice, exporting steel, and neither importing nor exporting TVs. We can conclude that producer surplus in Aquilonia is now
a. higher in the steel market, lower in the rice market, and unchanged in the TV market. b. higher in the rice and steel markets, and unchanged in the TV market. c. lower in the rice and TV markets, and higher in the steel market. d. lower in the rice and steel markets, and the same in the TV market.
Which buyers and sellers are included in the market under consideration depends on:
A. their physical proximity. B. the context. C. the income levels. D. their preferences.
For many consumers, bacon and eggs are complements. Therefore, egg producers monitor the price of bacon because the cross elasticity between bacon and eggs is
A. negative, and a decrease in the price of bacon will increase the demand for eggs. B. positive, and an increase in the price of bacon will increase the demand for eggs. C. negative, and a decrease in the price of bacon will decrease the demand for eggs. D. positive, and a decrease in the price of bacon will increase the demand for eggs.
Referring to the graph above, assume that, at first, the labor market is in equilibrium at point 4. In which scenario does unemployment rise, with no change in the quantity of employment?
A) real wage rises to the level of points 1 and 2 B) supply shifts to pass through point 5, with no change in the real wage C) demand shifts to pass through point 3, with no change in the real wage D) supply shifts to pass through point 3, with no change in the real wage