According to economic theory, state governments
A) will be biased toward chronic budget deficits.
B) will act in the public interest.
C) will act in the national interest.
D) will do all of the above.
E) will do none of the above.
E
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A lower price level combined with a decrease in real GDP occurs when the
A) short-run aggregate supply curve shifts rightward. B) short-run aggregate supply curve shifts leftward. C) aggregate demand curve shifts rightward. D) aggregate demand curve shifts leftward.
Tiger Woods, a professional golfer, pays a garage mechanic to change the motor oil of his car even though he can do the work himself. Which of the following best explains why Tiger Woods does NOT change the oil himself?
A. The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic. B. Tiger Woods has an absolute advantage in changing oil. C. There is no opportunity cost for the garage mechanic to change oil. D. Tiger Woods has a comparative advantage in changing oil.
If government increases its purchases by $15 billion and the MPC is 2/3, then we would expect the equilibrium GDP to:
A. increase by $30 billion. B. increase by $45 billion. C. decrease by $35 billion. D. increase by $50 billion.
Based on the information in Scenario 1, nominal GDP in 2016 in this economy was
A) $830. B) $1,025. C) $1,090. D) $1,345.