The portion of income that is spent on productive inputs, such as factories, machinery, and inventories, is called:
A. loanable funds.
B. consumption spending.
C. investment.
D. savings.
Answer: C
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An optimum currency area is a geographic region
A) with inflation near zero. B) that allows exchange rates to float. C) that has fixed exchange rates. D) for which the benefits of having a common currency exceed the costs.
Why is there a deadweight loss associated with subsidy payments?
A) There is no deadweight loss from a subsidy. B) Quantity supplied is less than the equilibrium amount, so consumers and producers lose surplus value on those units that are no longer produced. C) Quantity supplied exceeds the equilibrium amount, and consumer willingness to pay for these additional units is smaller than the marginal cost of producing them. D) The subsidy payment does not distort quantities in the market, but the government cost exceeds consumer willingness to pay for the quantity demanded.
Policies such as rent control and trade barriers persist
a. because economists are about evenly divided as to the merits of those policies. b. because almost all economists agree that those policies have no discernible economic effects. c. because almost all economists agree that those policies are desirable. d. despite the fact that almost all economists agree that those policies are undesirable.
Answer the following statement(s) true (T) or false (F)
1. Government expenditures are currently the lowest percentage of GDP they have ever been. 2. Transfer payments have doubled since the 1960s. 3. Social security, Medicare, and Medicaid are all discretionary programs. 4. State and local spending closely mirrors federal spending. 5. State and local governments receive significant funds from the federal government.