In the United States, interest payments on the federal debt were about ________ of total federal expenditures in 2011, and therefore large tax increases or significant cutbacks in other types of federal spending are generally considered ________ for
the government to be able to continue making the interest payments. A) 55%; necessary
B) 28%; unnecessary
C) 28%; necessary
D) 6%; unnecessary
D
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
An example of moral hazard is
a. A taxi driver paid per mile taking the shortest route b. a piece-rate garment worker shirking more than a per hour worker c. an hourly salesman working harder than a commission salesman d. an author on contract going to fewer book signings as one with a percentage royalty rate
A basket of goods cost $800 in the U.S. The same basket of goods costs $1,000 in France and the exchange rate is .80 euros per dollar. The same basket of goods costs 960 Australian dollars and the exchange rate is 1.2 Australian dollars per U.S. dollar. Purchasing power parity with the U.S. holds in
a. both France and Australia b. France but not Australia c. Australia but not France d. neither France nor Australia
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward