Deficits may be desirable in the short run if they:
A. increase savings necessary for future consumption and demand.
B. increase savings necessary for future investment and growth.
C. help to stabilize the economy when the economy is above potential output.
D. help to stabilize the economy when the economy falls below potential output.
Answer: D
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If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T), then they must
a. increase government spending by $8. b. increase taxes by $10. c. cut government spending and taxes by $10. d. decrease taxes by $10.
Demand describes how much of something people:
A. are willing and able to buy at alternative prices under certain circumstances. B. want, but may not necessarily be able, to buy under certain circumstances. C. are willing and able to sell under certain circumstances. D. be able to buy, but might not want to buy under certain circumstances.
The equilibrium price and quantity of a good, once attained, will
a. change only if either supply or demand changes b. change only if both supply and demand change c. change only if supply changes d. change only if demand changes e. never change
Which of the following statements is true?
A. Free trade will benefit all workers in a nation equally. B. As a result of specialization some workers will be displaced and harmed in the short run by free trade. C. Free trade leads to lower wages for all workers in both nations. D. Specialization will result in a decline in an industry and none of those workers will be able to find other jobs.