What is a cyclically adjusted budget deficit or surplus, and how is it used to determine whether discretionary fiscal policy is expansionary or contractionary?
What will be an ideal response?
The cyclically adjusted budget deficit or surplus is the deficit or surplus in the federal government's budget if real GDP equaled potential GDP. If the government is running a cyclically adjusted budget deficit, discretionary fiscal policy is expansionary because aggregate expenditure is increasing. If the government is running a cyclically adjusted budget surplus, discretionary fiscal policy is contractionary because aggregate expenditure is decreasing.
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Price differentiation is a situation in which
A) there are different prices for similar products reflecting differences in the marginal cost of providing the commodities to different groups of buyers. B) there are different prices for the same product that are not due to differences in the marginal cost of providing the commodity to different groups of buyers. C) consumers' comparison-shop. D) the demand curve is vertical.
In order to increase society's total welfarer, a production process that produces a negative externality should be
a. taxed b. provided by the government c. ignored d. subsidized e. exported
Back-loading of employees' wages helps a company because:
a. they act as incentives for employees to work hard throughout their tenure with the company. b. they completely eliminate all sorts of opportunistic behavior on the part of the employee throughout his/her tenure with the company. c. they reduce the actual cost burden of the employee on the company. d. they prevent opportunistic behavior on the employer's part.
Under the old Soviet communist system, government planning was substituted for the _________________.
Fill in the blank(s) with the appropriate word(s).