If a country has a $10 Trillion public debt and its average interest rate that it pays on it is 5%, then
A) its debt payments will be greater than GDP
B) its interest payments on debt will be $500 billion per year
C) its interest payments on debt will be higher than tax revenues
D) its debt has reached unsustainable levels
Answer: B) its interest payments on debt will be $500 billion per year
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A farmer sells raw milk for 50 cents to a dairy, who sells cheese made from it for $1.50 to a grocery wholesaler, who sells it for $1.90 to a supermarket, who sells it to the final consumer for $2.19. These transactions increase the GDP by
A) $0.50 + $1.00 + $0.40 + $0.29 = $2.19. B) $0.50 + $1.00 + $1.90 + $2.19 = $5.59. C) $0.50 + $1.00 = $1.50. D) $2.19 - $1.50 = $0.69. E) $2.19 - $0.50 = $1.69.
As noted in the text, the major Japanese auto manufacturers agreed to "voluntary" import restrictions that reduced the number of cars they could ship to the U.S. market in the 1980s
One of the key outcomes from this policy is that the Japanese manufacturers were able to: A) focus on more profitable auto markets in other countries. B) raise their prices of autos in the U.S. market and capture higher profit margins on the imported cars. C) cut their costs by more than the import tariff, so profit per auto increased. D) all of the above
Refer to Scenario 13.16. If Gooi moves first, the payoff in equilibrium will be
A) $150, $0. B) $150, $300. C) $400, $150. D) $50, $50. E) $650, $450.
Which of the following is true?
a. During any given year, the size of the economic pie available for allocation to individuals is fixed. b. When the link between worker productivity and reward is weakened, individuals have less incentive to create income. c. If they reduce income inequality, taxes and income transfers will not alter the incentive of individuals to engage in productive activity. d. The total output of an economy is unrelated to the distribution of income.