If the U.S. government can run chronic budget deficits, why can't state governments do the same?
A) Conservatives have more power in state legislatures than in the U.S. Congress.
B) Voters do not believe in budget deficits and they control state governments.
C) Most states have no income tax.
D) State constitutions require balanced budgets.
E) States must rely on taxation for the funds to repay creditors.
E
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In the classical model, an increase in aggregate demand will cause
A) an increase in actual output, or Gross Domestic Product (GDP). B) a decrease in actual output, or Gross Domestic Product (GDP). C) a decrease in price level. D) an increase in price level.
If the price elasticity of demand for a good is .75, the demand for the good can be described as:
A. inelastic. B. normal. C. elastic. D. inferior.
In the used pick-up truck market:
A. some of the predictions of the lemons model are observed some of the time. B. the lemons model accurately describes the market. C. none of the predictions of the lemons model are observed. D. there is no asymmetric information, and so the lemons model does not apply.
The relationship between the price of a good and the quantity that a single consumer is willing to buy during a particular time period is shown by the:
A. market supply curve. B. individual supply curve. C. market demand curve. D. individual demand curve.