In the wake of the financial crisis of 2007-2009, the debt-to-GDP ratio has risen in many countries around the world. Should the expenditures enabled by this debt be considered government consumption or government investment?

What will be an ideal response?


Probably, government investment. Since a well-functioning financial sector is essential for economic growth, its rescue may be viewed as an investment in the economy's future productivity. Moreover, the avoidance of an economic depression ensures that economic activity will continue and be taxed, enabling payments on interest and principal.

Economics

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A deadweight loss occurs when the market is functioning efficiently

Indicate whether the statement is true or false

Economics

If your income is $92,000 and you pay taxes of $19,475, what is your average tax rate? Show your work

What will be an ideal response?

Economics

When price exceeds average variable cost in the short run, a competitive firm's marginal cost curve is regarded as its supply curve because

a. the position of the marginal cost curve determines the price for which the firm should sell its product. b. among the various cost curves, the marginal cost curve is the only one that slopes upward. c. the marginal cost curve determines the quantity of output the firm is willing to supply at any price. d. the firm is aware that marginal revenue must exceed marginal cost in order for profit to be maximized.

Economics

Considering only its direct effect on income, contractionary monetary policy tends to:

A. increase a trade deficit and increase the exchange rate. B. decrease a trade deficit and increase the exchange rate. C. increase a trade deficit and decrease the exchange rate. D. decrease a trade deficit and decrease the exchange rate.

Economics