A government's budget deficit is equal to
A) the change in the value of bonds issued plus the change in the money supply.
B) the change in the value of bonds issued minus the change in the money supply.
C) the change in the money supply minus the change in the value of bonds issued.
D) either the change in the value of bonds issued or the change in the money supply.
A
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A constitutional amendment is passed that requires the government to have an annually balanced budget in the sense that changes in spending should be matched by equivalent changes in taxes. Should the government desire to increase real GDP by $25 billion and meet the provisions of the law, itÂ
A. could increase spending by $25 billion and reduce taxes by $25 billion. B. cannot possibly reach its objective without breaking the law. C. could increase spending by $30 billion and increase taxes by $25 billion. D. could increase spending by $25 billion and increase taxes by $25 billion.
The figure above shows the production possibilities frontier for a country. In order for it to move from producing at point A to producing at point B, the country would need to incur an opportunity cost of
A) 4 million SUVs. B) 3 million SUVs. C) 1 million SUVs. D) 3 million compact cars. E) 0 because the gain in compact cars exceeds the loss in SUVs.
Does fiscal policy affect monetary policy?
A) No, because real output and income can and sometimes do move in the opposite direction from nominal money output and income. B) Yes, because the Fed and the Treasury naturally tend to pursue similar goals. C) Yes, because government deficits or surpluses affect the total demand for credit. D) Yes, because the government usually prints new money to finance deficits and retires that money when it runs a surplus.
Following a decrease in the price of a good, an individual will purchase more of the now less expensive good and less of other more expensive goods. This is known as the _____ effect
a. income b. endowment c. substitution d. price e. scale