An increase in government spending financed by borrowing changes people's expectations about future taxation such that current consumption expenditures
a. fall. The increase in expenditures makes it likely that future taxes will create smaller distortions.
b. fall. The increase in expenditures makes it likely that future taxes will create larger distortions.
c. rise. The increase in expenditures makes it likely that future taxes will create smaller distortions.
d. rise. The increase in expenditures makes it likely that future taxes will create larger distortions.
b
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Suppose the U.S. can produce 10 units of food and five units of clothing (or any linear combination) and Canada can produce six units of food and three units of clothing (or any linear combination)
What type of trade will occur between these two countries? Explain.
What most accurately describes the trend in the Gross Domestic Product of the US between 1870 and 2007?
a. Real GDP increased by about two percent per year. b. Although nominal GDP increased significantly, real GDP went up only slightly because of inflation. c. Both nominal and real GDP have been flat because the periods of inflation were offset by the periods of deflation. d. The fluctuations in GDP have become greater over time, and were largest in the late 1900s.
All of the following are examples of negative externalities except
a. getting the flu vaccine. b. smoking in a crowded bar. c. driving while intoxicated. d. littering in the park. e. pouring paint down the storm drains.