Write down your understanding and interpretation for each of the following equations, then make sure that you familiarize yourself with these formulas: SG = (T – TR) – G
What will be an ideal response?
Answer: Government budget balance is the difference between tax revenue and government spending, when government spending exceeds tax revenue, the government runs a budget deficit (SG<0),the government deficit is a negative contribution to national savings. When SG=0, government has a balanced budget; when SG>0, the government has a budget surplus.
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Which of the following are considered factors of production used to produce goods and services?
I. Land II. Labor III. Capital IV. Entrepreneurship A) I and II only B) I and III only C) I, II and III only D) I, II, III and IV
A change in the required reserve ratio changes: a. the amount of actual reserves in the banking system
b. the amount of excess reserves in the banking system. c. the value of government securities held by the Fed. d. the level of insurance for banks who are members of the FDIC.
Which of the following is a normative statement?
a. The unemployment rate has decreased. b. Governments should hire anyone who cannot get a job. c. Governments in most developed countries provide unemployment benefits. d. The majority of union members work for the government.
Assume the economy is at point D. What would happen to AE2 and the point of equilibrium if P increased to 110 while the autonomous parts of consumption, investment, government purchases, and net exports remained constant?
a. AE2 would shift up, and the point of equilibrium would move right. b. AE2 would shift down, and the point of equilibrium would move left. c. AE2 would not move, but the point of equilibrium would move left. d. AE2 would not move, but the point of equilibrium would move right.