The persistence of budget deficits during the last several decades is not surprising because politicians will find
a. budget surpluses more attractive than budget deficits.
b. tax increases more attractive than increases in government expenditures.
c. budget deficits more attractive than budget surpluses.
d. reductions in government expenditures more attractive than tax reductions.
C
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The investment by firms in the creation of products not yet available on the market is referred to as:
A) working capital. B) creative capital. C) innovation funds. D) research and development.
Typically, the most important determinant of private investment in an economy is
A) the inflow of foreign investment. B) the size of the capital account surplus. C) the size of the current account deficit. D) the outflow of private investment. E) the amount of domestic savings.
Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?
a. Cellular phones become less popular. b. Traditional land line phones become more expensive. c. The components used to produce cellular phones become less expensive. d. Firms expect the price of cellular phones to fall in the future.
You won a free ticket to see the latest Star Wars movie this Friday night (which you can costlessly resell for its face value of $15). Your favorite band is also performing on Friday and is your only alternative activity. Friday is your last chance to see either the movie or the band. Tickets to see your favorite band cost $30, and on any given day, you would be willing to pay as much as $50 for a ticket. Based on this information, what is your opportunity cost of going to see the Star Wars movie on Friday?
A. $35 B. $30 C. $50 D. $0