In 2007, the U.S. economy was operating close to potential. The budget deficits experienced by the United States in 2007 was:
A. primarily cyclical deficits.
B. primarily structural deficits.
C. neither structural nor cyclical deficits.
D. about evenly split between structural and cyclical deficits.
Answer: B. primarily structural deficits.
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________
A) increases; increases B) decreases; decreases C) decreases; increases D) increases; decreases
If aggregate demand in the U.S. had grown more slowly than it actually did in 2010, the
a. unemployment rate would have been even lower. b. inflation rate would have been even lower. c. unemployment rate would have been the same. d. economy would have grown faster.
If the reserve ratio is 20 percent, how much money can be created from $100 of reserves? Show your work