What important lesson did American economists learn in the 1980s and again in 2001-2003?
a. Large tax cuts can lead to a balance of trade surplus.
b. Large government budget deficits can crowd out consumption.
c. Large government budget deficits can bankrupt the nation.
d. Large government budget deficits can crowd out net exports.
d
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Since all costs are positive, then economic profit would always be smaller than accounting profit.
Answer the following statement true (T) or false (F)
Game theory analysis of macro policy suggests that as voters become more short-sighted
A) policy makers will be tempted to raise taxes. B) policy makers will be forced to balance the budget. C) policy makers will adopt policies today to achieve balanced budgets in the future. D) all of the above E) none of the above
Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?
A) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed. B) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC. C) The shape of the LRATC is affected by the law of diminishing returns. D) The SRATC, but not the LRATC, can be used by a firm's managers for planning.
The era of Prohibition began in 1920 when the Volstead Act was passed to implement the Eighteenth Amendment to the Constitution, which prohibited the production and sale of liquor and beer. In 1920 much of this activity went underground, and Al Capone became a leading illegal entrepreneur. Assuming the amount of liquor and beer produced stayed the same, what was the effect of the Volstead Act on
the GDP in 1920? a. GDP would have declined, since activities in the underground economy are not included. b. GDP would have remained the same, since only the organization producing the goods changed. c. GDP would have increased, because production in the underground economy increased. d. Real GDP would have increased, while nominal GDP would have decreased.