Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of CompanyRevenuesCost of Purchased inputsCitrus Growers Inc.$0.750Florida Jam Company$2.00$.75The Corner Store$2.50$2.00What is the sum of the value added of all the firms?
A. $4.50
B. $2.50
C. $5.25
D. $2.75
Answer: B
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The basic difference between government spending on public goods and government transfer payments is that spending
a. on public goods reallocates resources between the public and private sectors, while spending on transfer payments does not b. on transfer payments reallocates resources from the private to the public sector, while spending on public goods does not c. on public goods reallocates resources between the public and private sectors, while transfer payments reallocate resources from the public to the private sector d. on public goods reallocates resources between different levels of government spending, while spending on transfer payments reallocates resources from the privatesector to the public sector e. on public goods reallocates resource from the private to the public sector, while spending on transfer payments reallocates resources from the federal government tostate governments
If the sacrifice ratio is 3, then reducing the inflation rate from 5 percent to 3 percent would require sacrificing
a. 2 percent of annual output. b. 6 percent of annual output. c. 8 percent of annual output. d. 11 percent of annual output.
Which of the following occurs when consumers decide to save every penny of a tax cut, knowing that this tax cut must be financed by future tax increases?
A. Keynesian offset B. Ricardian equivalence C. Fiscal balancing D. Animal spirits
When policy makers choose between tax policy and spending policy to affect the level of aggregate demand, they tend to choose on the basis of
A. how large a public sector they want. B. how much they want to change aggregate demand. C. how much they want to change aggregate supply. D. which has the larger multiplier.