Suppose that an expansionary gap of $500 billion exists in the economy, and the marginal propensity to consume is 0.8 . Which of the following correctly describes a discretionary fiscal policy that will be just sufficient to close this expansionary gap?
a. Increase government spending by $250 billion.
b. Increase taxes by $125 billion.
c. Decrease government spending by $250 billion.
d. Decrease taxes by $125 billion.
b
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Historical evidence seems to indicate that
A) budget and trade deficits generally move in the same direction. B) budget and trade deficits generally move in the opposite direction. C) trade and budget deficits decrease when the president is a Republican, and increase when the president is a Democrat. D) there is no consistent relationship between trade and budget deficits.
If a resource is in fact becoming scarcer, then one should expect
a. the price of the resource to rise. b. less demand for the resource as people try to conserve. c. greater supply as people reduce inventories before it is all gone. d. all of the above.
Suppose in the country of Jumanji that the price of wheat with no trade allowed is above the world price of wheat. If Jumanji allows free trade, will Jumanji be an importer or an exporter of wheat?
Money is critical in facilitating market exchanges and the specialization that these exchanges permit.
Answer the following statement true (T) or false (F)