The cyclically adjusted deficit as a percentage of GDP is 2 percent in year 1. This deficit becomes 1 percent of GDP in year 2. It can be concluded from year 1 to year 2 that:
A. fiscal policy was expansionary.
B. the federal government is increasing spending.
C. the federal government is decreasing taxes.
D. fiscal policy was contractionary.
Answer: D
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If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent, then the inflation rate is
a. -6.5 percent. b. -1.5 percent. c. 1.5 percent. d. 6.5 percent.
Until 1933, the U.S. dollar was backed by the ______.
a. silver standard b. gold standard c. standard of living d. word of the government
Economics is the social science that studies
A) the real reasons people buy goods and services.
B) the psychology of individuals and businesses.
C) whether a nation has enough natural resources.
D) how people make choices to cope with scarcity.
E) how choices made in the social interest could eliminate scarcity.
Comparative advantage implies that you
A) can produce more units of a good or service than another. B) can produce a good or service at a lower opportunity cost. C) can produce goods with more capital resources. D) can produce goods with more human resources.