To get the economy out of a slump, Keynes believed that the government should
A. increase both taxes and government spending.
B. decrease taxes and/or increase government spending.
C. increase taxes and/or decrease government spending.
D. cut both taxes and government spending.
Answer: B
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In a fixed exchange rate system, an increase in the exchange rate at which a currency is pegged is called a(n):
A. appreciation. B. devaluation. C. revaluation. D. depreciation.
In 1998 the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have
a. increased Russian interest rates and net exports. b. reduced Russian interest rates and net exports. c. increased Russian interest rates and reduced Russian net exports. d. reduced Russian interest rates and increased Russian net exports.
The main difference between direct and indirect taxes is that
A. indirect taxes are automatically deducted from workers’ paychecks and direct taxes are not. B. direct taxes are paid to state and local governments and indirect taxes are paid to the federal government. C. direct taxes are taxes levied on people and indirect taxes are taxes levied on activities undertaken by people. D. direct taxes are usually proportional and indirect taxes are usually progressive.
If both a monopoly and a competitive market with the same marginal cost would produce a quantity that is greater than the social optimum in a market because of externalities, then
A) welfare is greater under monopoly. B) welfare is greater under competition. C) welfare is the same for both market structures. D) the social optimum must be zero.