Suppose that a country has an inflation rate of about 2 percent per year and a real GDP growth rate of about 2.5 percent per year. Then the government can have a deficit of about
a. 5 percent of GDP without raising the debt-to-income ratio.
b. 4.5 percent of GDP without raising the debt-to-income ratio.
c. 1.25 percent of GDP without raising the debt-to-income ratio.
d. .5 percent of GDP without raising the debt-to-income ratio.
b
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If a study shows that two goods have a high negative cross elasticity of demand value, then the two goods are competing in the same market.
Answer the following statement true (T) or false (F)
Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living — the costs of goods and services we buy — without increasing income in general."
What will be an ideal response?
Graphically, all else constant, a decrease in the price of labor would be illustrated by:
A) a parallel shift of the isocost line in toward the origin. B) rotating the isocost line away from the origin along the labor axis. C) a parallel shift of the isocost line away from the origin. D) rotating the isocost line in toward the origin along the capital axis.
Over time, an increase in a nation's stock of physical capital will:
a. shift the production possibilities curve inward. b. cause an economy to operate inside its production possibilities curve. c. shift the production possibilities curve outward. d. eliminate the basic economic problem of scarcity.