According to the Classical advocates of sound finance, if an economy is in a recession, the government should run:
A. a budget surplus and decrease spending, which will increase output.
B. a budget deficit and increase spending, which will increase output.
C. neither a surplus nor a deficit since changes in deficit spending do not affect output.
D. neither a surplus nor a deficit since changes in spending affect output.
Answer: C
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The amount of interest owed on a loan of $2,000 after a year at an interest rate of 10 percent is:
A. $200. B. $100. C. $2,200. D. $2,100.
When using a logarithmic scale to plot output per capita over time, an upward-sloping curve that becomes increasingly steep indicates
A) output per capita is not changing. B) output per capita is growing by a constant amount each year. C) output per capita is growing by a constant percentage each year. D) output per capita is growing by an increasing percentage each year. E) output per capita is not defined.
The amount of money that someone would pay today for the right to receive a future payment is called
a. the present value of the future payment b. the determinate value of the future payment c. the interest rate d. the principal e. the time discount
Historically, Keynesian economists have argued that government spending will stimulate aggregate demand more than tax cuts because
a. government spending will stimulate aggregate demand more quickly than a tax cut. b. there are fewer adverse side effects to an increase in government spending. c. all of the spending will add to aggregate demand, but a portion of the tax cut will be saved. d. an increase in government spending can quickly be reversed once the economy has recovered.