Government spending is an injection in the sense that it
a. increases the amount of total spending.
b. increases the size of the federal deficit.
c. decreases the amount of household saving.
d. decreases the amount of taxes paid.
a
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Whenever average cost exceeds marginal cost,
a. average cost is rising. b. average cost is falling. c. marginal cost is rising. d. marginal cost is falling.
According to the Taylor rule:
a. if inflation falls by 1 percentage point below its target of 2 percent, then the Fed should raise the real federal funds rate by one-half a percentage point. b. all of these are appropriate Fed actions. c. when real GDP is equal to potential GDP and inflation is equal to its target of 4 percent, the federal funds rate should be kept at 2 percent. d. if real GDP rises by 2 percent above potential GDP, the Fed should raise the real federal funds rate by 1 percentage point.
Suppose a study showed that as the income of doctors increased, doctors spent more time on the golf course and less in the office. What would such a conclusion say about the relative sizes of substitution and income effects?
What will be an ideal response?
If the President and Congress made decisions that increase the federal budget deficit, how will GDP growth change?
A. It will grow more quickly. B. It will grow at the same rate. C. It will grow more slowly.