The uses-of-saving identity shows that if the government budget deficit rises, then one of the following must happen.
A. Private saving must rise, investment must fall, and/or the current account must fall.
B. Private saving must rise, investment must fall, and/or the current account must rise.
C. Private saving must fall, investment must rise, and/or the current account must rise.
D. Private saving must rise, investment must rise, and/or the current account must fall.
Answer: A
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Which type of policy raises the most revenue for the government?
A) tariff B) quota C) voluntary export restraints D) If they are set at the same level, all of the above raise the same amount of revenue. E) None of the above answers is correct because none of the policies raises revenue for the government.
The implication of the expectations theory that expected returns for a holding period must be the same for bonds of different maturities depends on the assumption that
A) yield curves usually slope upward. B) yield curves usually slope downward. C) instruments with different maturities are perfect substitutes. D) savers are usually risk averse.
Does it make any difference whether health-care expenditures are paid for by the consumer or by a third party (the government or an insurance company, for example)?
a. No; the quantity of health-care service demanded is not influenced by either the price of health care or who is paying for it. b. Yes; consumers of health care will have a stronger incentive to economize when they are buying the service with their own money. c. Yes; consumers of health-care services will have a stronger incentive to economize when the services are paid for by a third party. d. No; health care is an essential service, and therefore, the incentive to economize on it is unaffected by who is paying for the service.
The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests
a. schooling acts only as a signal of ability. b. humans cannot be considered "capital." c. productivity is not linked to wages. d. ability, effort, and chance matter more.