Does the experience of World War II demonstrate that government budget deficits and surpluses can be used to stabilize aggregate demand?
A) No, because the deficits run during the 1930s did not end the recession.
B) No, because the fact that deficits or surpluses can alter aggregate demand does not prove they can stabilize it.
C) Yes, because nominal GDP increased by more than the amount of the deficit in each wartime year.
D) Yes, because World War II demonstrated the multiplier effect of deficits.
B
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The value of a loan of $2,000 after a year at 2 percent interest is:
A. $4,000. B. $2,020. C. $2,040. D. $2,400.
Which of the following statements is not valid when supply is perfectly elastic?
a. The elasticity of supply approaches infinity. b. The supply curve is horizontal. c. Very small changes in price lead to very large changes in quantity supplied. d. The time period under consideration is more likely a short period rather than a long period.
For a country like the United States, explain why the CPI would increase at a faster rate than the GDP deflator during periods of oil and gasoline price increases
Suppose that the percentage change in demand is 10%, the price elasticity of demand is 1, and the percentage change in the equilibrium price is 3.33%. What is the price elasticity of supply?
A. 0 B. 1 C. 2 D. 3