If the government were to decrease its spending, it would expect aggregate demand to:
A. rise, and thus GDP to fall.
B. rise, and thus GDP to rise.
C. fall, and thus GDP to rise.
D. fall, and thus GDP to fall.
Answer: D
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Ultimately, the real burden of paying for Social Security benefits will be paid for by
A) taxes levied on workers. B) Social Security trust fund bonds. C) new federally issued Treasury bills. D) a new tax levied on businesses.
The theory of creative destruction implies that too much competition leads to monopolies
Indicate whether the statement is true or false
The contestable market theory best applies to
A. pure monopoly. B. oligopoly. C. monopolistic competition. D. perfect competition.
The crowding out effect:
A. increases the multiplier effect, so that an increase in taxes reduces income by less. B. decreases the multiplier effect, so that an increase in taxes reduces income by less. C. increases the multiplier effect, so that an increase in taxes reduces income by more. D. decreases the multiplier effect, so that an increase in taxes reduces income by more.