If the government increased defense spending by $1 million and laid off enough Justice Department employees to decrease the Department of Justice budget by $1 million, which of the following is the likely net effect?
a. An increase in the budget deficit and transfer payments
b. An increase in the budget deficit and net taxes
c. An increase in the budget deficit and government spending
d. No change in the budget deficit because there is no net change in government spending
e. No change in the budget deficit because neither defense spending nor the Department of Justice is included in government spending
d
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In the long run, in a perfectly competitive industry:
A. economic loss tends to persist. B. the number of firms in the industry will increase. C. economic profit tends to persist. D. economic profit and loss are driven to zero by entry and exit.
The marginal cost of production that is borne by the entire society is the
A) marginal private cost. B) marginal social cost. C) marginal external cost. D) None of the above answers is correct.
Most favored nation (MFN) status means that a country treats another country
A) better than its other trading partners. B) the same as its other trading partners. C) worse than its other trading partners. D) any way it chooses since it is the "most favored nation." E) None of the above.
Given the level of real GDP, the equilibrium level of the interest rate depends on the
A) demand for money. B) monetary-fiscal policy mix. C) size of the multiplier. D) extent of crowding out.