A budget philosophy using fiscal policy to achieve the economy's potential GDP, rather than balancing budgets either annually or over the business cycle is termed as budget finance
Indicate whether the statement is true or false
true
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The law of diminishing marginal returns implies that, in the short run the
a. output must fall beyond a certain point b. price must fall beyond a certain point c. marginal product of the variable input must eventually decrease d. wages of workers must eventually increase e. total cost must fall beyond a certain point
Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:
A. an application of the Scarcity Principle. B. not an economic choice. C. not rational because it ignores the importance of total benefits and total costs. D. an application of the Cost-Benefit Principle.
Answer the following questions true (T) or false (F)
1. If the federal budget has an actual budget surplus of $75 billion, but a cyclically adjusted budget surplus of $50 billion, then the economy must be above potential real GDP. 2. An increase in the tax wedge associated with a given economic activity will decrease the level of that activity. 3. The long-run growth rate of real GDP depends primarily on the growth in the number of hours worked and the growth rate of labor productivity.
Refer to the information provided in Table 24.8 below to answer the question(s) that follow.Table 24.8All Figures in Billions of DollarsOutput (Income)Net TaxesConsumption Spending (C = 100 + 0.9Yd)SavingsPlannedInvestment PurchasesGovernment Spending2,6001002,3501501502002,8001002,5301701502003,0001002,7101901502003,2001002,8902101502003,4001003,0702301502003,6001003,2502501502003,8001003,430270150200Refer to Table 24.8. The MPC is
A. 0.9. B. 0.8. C. 0.75. D. 0.5.