Refer to the diagram, where T is tax revenues and G is government expenditures. All figures are in billions of dollars. If the full-employment GDP and actual GDP are each $400 billion, this economy will realize a:
A. cyclically adjusted deficit of $20 billion.
B. cyclical deficit of $20 billion.
C. cyclical surplus of $20 billion.
D. cyclically adjusted deficit of zero.
A. cyclically adjusted deficit of $20 billion.
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A game includes
A) a strategy. B) payoffs. C) rules. D) All of the above.
A government wishing to maximize its tax revenues should
A) always assess the highest possible tax rate. B) always assess the lowest possible tax rate. C) determine the highest possible tax rate and then back it down by exactly 4 percentage points. D) push tax rates up to the point where revenues peak, but raise the tax rate no farther.
If the demand for a particular agricultural product is highly elastic and bad weather causes the supply to decrease, then we would expect the price of agricultural products to
A) decrease and farmers' revenues to decrease. B) increase and the demand to decrease. C) increase while farmers' revenues decrease significantly. D) increase by a large percentage while farmers' revenues decrease only slightly.
If bagels and doughnuts are substitutes, then a decrease in the price of doughnuts will result in
A. An increase in the demand for bagels. B. An increase in the demand for doughnuts. C. A decrease in the demand for bagels. D. A decrease in the demand for doughnuts.