Introduction to Macroeconomics
Exam Materials
Course Introduction
Introduction to Macroeconomics offers a foundational understanding of the principles and theories that govern the functioning of entire economies. The course covers key topics such as gross domestic product (GDP), inflation, unemployment, economic growth, and fiscal and monetary policy. Students will learn how economists measure economic activity, analyze fluctuations in national output, and assess the impact of government intervention and international trade. Through real-world examples and data analysis, the course prepares students to critically evaluate economic issues and understand the broader forces shaping national and global economies.
Recommended Textbook
Principles of Macroeconomics 6th Edition by N. Gregory Mankiw
Available Study Resources on Quizplus
23 Chapters
10142 Verified Questions
10142 Flashcards
Source URL: https://quizplus.com/study-set/2472
Page 2
Chapter 1: Ten Principles of Economics
Available Study Resources on Quizplus for this Chatper
347 Verified Questions
347 Flashcards
Source URL: https://quizplus.com/quiz/49073
Sample Questions
Q1) The government enforces property rights by
A)requiring property owners to pay property taxes.
B)providing police and courts.
C)forcing people to own property.
D)providing public parks and recreation facilities.
Answer: B
Q2) In the short run, an increase in the money supply is likely to lead to
A)lower unemployment and lower inflation.
B)lower unemployment and higher inflation.
C)higher unemployment and lower inflation.
D)higher unemployment and higher inflation.
Answer: B
Q3) Prices usually reflect
A)only the value of a good to society.
B)only the cost to society of making a good.
C)both the value of a good to society and the cost to society of making the good.
D)neither the value of a good to society nor the cost to society of making the good.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: Thinking Like an Economist
Available Study Resources on Quizplus for this Chatper
535 Verified Questions
535 Flashcards
Source URL: https://quizplus.com/quiz/49074
Sample Questions
Q1) The design of tax policy is one of the responsibilities of economists who work at the A)Council of Economic Advisers.
B)Federal Reserve.
C)Department of the Treasury.
D)Congressional Budget Office.
Answer: C
Q2) In the circular-flow diagram, which of the following items represents a payment for a factor of production?
A)interest
B)capital
C)spending by households on goods
D)spending by households on services
Answer: A
Q3) The production possibilities frontier illustrates
A)the trade-off between efficiency and equality.
B)the combination of output that an economy should produce.
C)the combination of output that each member of society should consume.
D)None of the above is correct.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Interdependence and the Gains From Trade
Available Study Resources on Quizplus for this Chatper
442 Verified Questions
442 Flashcards
Source URL: https://quizplus.com/quiz/49075
Sample Questions
Q1) Suppose that a worker in Agland can produce either 10 units of organic grain or 2 units of incense per year, and a worker in Zenland can produce either 5 units of organic grain or 15 units of incense per year. There are 20 workers in Agland and 10 workers in Zenland. Currently the two countries do not trade. Agland produces and consumes 100 units of grain and 20 units of incense per year. Zenland produces and consumes 50 units of grain and no incense per year. If each country made the decision to specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by
A)30 units of grain and 100 units of incense.
B)30 units of grain and 150 units of incense.
C)50 units of grain and 90 units of incense.
D)50 units of grain and 130 units of incense.
Answer: D
Q2) Refer to Table 3-3. Zimbabwe has an absolute advantage in the production of A)toothbrushes and a comparative advantage in the production of toothbrushes.
B)toothbrushes and a comparative advantage in the production of hairbrushes.
C)hairbrushes and a comparative advantage in the production of toothbrushes.
D)hairbrushes and a comparative advantage in the production of hairbrushes.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Market Forces of Supply and Demand
Available Study Resources on Quizplus for this Chatper
569 Verified Questions
569 Flashcards
Source URL: https://quizplus.com/quiz/49076
Sample Questions
Q1) Which of these statements best represents the law of supply?
A)When input prices increase, sellers produce less of the good.
B)When production technology improves, sellers produce less of the good.
C)When the price of a good decreases, sellers produce less of the good.
D)When sellers' supplies of a good increase, the price of the good increases.
Q2) If a seller in a competitive market chooses to charge more than the going price, then
A)the sellers' profits must increase.
B)the owners of the raw materials used in production would raise the prices for the raw materials.
C)other sellers would also raise their prices.
D)buyers will make purchases from other sellers.
Q3) For the general population, a 10 percent increase in the price of cigarettes leads to a
A)1 percent reduction in the quantity demanded of cigarettes.
B)4 percent reduction in the quantity demanded of cigarettes.
C)10 percent reduction in the quantity demanded of cigarettes.
D)12 percent reduction in the quantity demanded of cigarettes.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Elasticity and Its Application
Available Study Resources on Quizplus for this Chatper
503 Verified Questions
503 Flashcards
Source URL: https://quizplus.com/quiz/49077
Sample Questions
Q1) If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by
A)1.66%, and aluminum foil sellers' total revenue will increase as a result.
B)1.66%, and aluminum foil sellers' total revenue will decrease as a result.
C)3.48%, and aluminum foil sellers' total revenue will increase as a result.
D)3.48%, and aluminum foil sellers' total revenue will decrease as a result.
Q2) Refer to Table 5-5. Along which of the supply curves does quantity supplied move proportionately more than the price?
A)along supply curve B only
B)along supply curves B and C
C)along all three supply curves
D)None. Quantity supplied moves proportionately less than the price along all of the three supply curves.
Q3) For which pairs of goods is the cross-price elasticity most likely to be positive?
A)peanut butter and jelly
B)bicycle frames and bicycle tires
C)pens and pencils
D)college textbooks and iPods
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Supply, Demand, and Government Policies
Available Study Resources on Quizplus for this Chatper
556 Verified Questions
556 Flashcards
Source URL: https://quizplus.com/quiz/49078
Sample Questions
Q1) Refer to Figure 6-9. At which price would a price ceiling be binding?
A)$4
B)$5
C)$6
D)$7
Q2) A binding minimum wage tends to
A)cause a labor surplus.
B)cause unemployment.
C)have the greatest impact in the market for teenage labor.
D)All of the above are correct.
Q3) Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on
A)a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
B)the government's policy of maintaining a price ceiling on gasoline.
C)an indifference among U.S. consumers toward conservation.
D)the lack of substitutes for crude oil.
Q4) A price floor set above the equilibrium price causes a surplus in the market.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Consumers, Producers, and the Efficiency of Markets
Available Study Resources on Quizplus for this Chatper
460 Verified Questions
460 Flashcards
Source URL: https://quizplus.com/quiz/49079
Sample Questions
Q1) Chad is willing to pay $5.00 to get his first cup of morning latté; he is willing to pay $4.50 for a second cup. He buys his first cup from a vendor selling latté for $3.75 per cup. He returns to that vendor later in the morning to find that the vendor has increased her price to $3.90 per cup. Chad buys a second cup. Which of the following statements is correct?
A)Chad's willingness to pay for his second cup of latté was smaller than his willingness to pay for his first cup of latté.
B)Chad's consumer surplus on his second cup of latté was larger than his consumer surplus on his first cup of latté.
C)Chad is irrational in that he is willing to pay a different price for his second cup of latté than what he is willing to pay for his first cup of latté.
D)Chad places a higher value on his second cup of latté than on his first cup of latté.
Q2) If the government imposes a binding price ceiling in a market, then the producer surplus in that market will increase.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Application: The Costs of Taxation
Available Study Resources on Quizplus for this Chatper
422 Verified Questions
422 Flashcards
Source URL: https://quizplus.com/quiz/49080
Sample Questions
Q1) The decrease in total surplus that results from a market distortion, such as a tax, is called a
A)wedge loss.
B)revenue loss.
C)deadweight loss.
D)consumer surplus loss.
Q2) A tax placed on a good
A)causes the effective price to sellers to increase.
B)affects the welfare of buyers of the good but not the welfare of sellers.
C)causes the equilibrium quantity of the good to decrease.
D)creates a burden that is usually borne entirely by the sellers of the good.
Q3) Refer to Figure 8-9. The consumer surplus with the tax is
A)$2,000.
B)$4,000.
C)$6,000.
D)$8,000.
Q4) When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax.
A)True
B)False
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Application: International Trade
Available Study Resources on Quizplus for this Chatper
409 Verified Questions
409 Flashcards
Source URL: https://quizplus.com/quiz/49081
Sample Questions
Q1) Refer to Figure 9-15. Consumer surplus with trade and without a tariff is A)A.
B)A + B.
C)A + C + G.
D)A + B + C + D + E + F.
Q2) Refer to Figure 9-3. With trade, China will
A)import 100 pencil sharpeners.
B)import 250 pencil sharpeners.
C)export 150 pencil sharpeners.
D)export 250 pencil sharpeners.
Q3) The history of the textile industry raises important questions for economic policy. A)True
B)False
Q4) When a government imposes a tariff on a product, the domestic price will equal the world price. A)True
B)False
Q5) Characterize the two different approaches a nation can take to achieve free trade. Does one approach have an advantage over the other?
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Measuring a Nations Income
Available Study Resources on Quizplus for this Chatper
428 Verified Questions
428 Flashcards
Source URL: https://quizplus.com/quiz/49082
Sample Questions
Q1) Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.
A)True
B)False
Q2) Which of the following is included in GDP?
A)medical marijuana purchased from a government-run pharmacy by a glaucoma patient
B)recreational marijuana purchased from a drug dealer by a college student
C)recreational marijuana produced and consumed by a man in his attic
D)All of the above are included in GDP.
Q3) In the economy of Ukzten in 2010, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $500, and investment was $2000. What were Ukzten's exports in 2010?
A)-$800
B)-$300
C)$200
D)$300
Q4) Changes in real GDP reflect only changes in the amounts being produced.
A)True
B)False
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Measuring the Cost of Living
Available Study Resources on Quizplus for this Chatper
436 Verified Questions
436 Flashcards
Source URL: https://quizplus.com/quiz/49083
Sample Questions
Q1) Which of the following statements is correct?
A)The CPI can be used to compare dollar figures from different points in time.
B)The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate.
C)Compared to the consumer price index (CPI), the GDP deflator is the more common gauge of inflation.
D)The GDP deflator better reflects the goods and services bought by consumers than does the CPI.
Q2) When box office receipts are not corrected for inflation, the most popular movie of all time is
A)Star Wars.
B)Avatar.
C)Gone With the Wind.
D)The Dark Knight.
Q3) Refer to Scenario 11-4. The Wrexington salary in Charlieville dollars is
A)$30,000.00.
B)$33,333.33.
C)$45,000.00
D)$83,333.33.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Production and Growth
Available Study Resources on Quizplus for this Chatper
417 Verified Questions
417 Flashcards
Source URL: https://quizplus.com/quiz/49084
Sample Questions
Q1) If over a short time there is an increase in the number of people retired and a decrease in the number of people working, then productivity
A)and real GDP per person rise.
B)rises but real GDP per person falls.
C)falls and real GDP per person rises.
D)and real GDP per person fall.
Q2) Other things the same, domestic investment will increase a country's real GDP by more than foreign investment.
A)True
B)False
Q3) Which of the following provide benefits to society at large and not just to the person(s) who pursues it?
A)both technological knowledge that is a public good and education
B)technological knowledge that is a public good, but not education
C)education, but not technological knowledge that is a public good
D)neither education, nor technological knowledge that is a public good
Q4) Petroleum is an example of a nonrenewable resource.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Saving, Investment, and the Financial System
Available Study Resources on Quizplus for this Chatper
473 Verified Questions
473 Flashcards
Source URL: https://quizplus.com/quiz/49085
Sample Questions
Q1) If a reform of the tax laws encourages greater saving, the result would be
A)higher interest rates and greater investment.
B)higher interest rates and less investment.
C)lower interest rates and greater investment.
D)lower interest rate and less investment.
Q2) Credit risk refers to the probability that the issuer of a bond will fail to pay some or all of the interest or principal.
A)True
B)False
Q3) Other things the same, an increase in government expenditures with no change in taxes makes national saving
A)rise. The supply of loanable funds shifts right.
B)rise. The demand for loanable funds shifts right.
C)fall. The supply of loanable funds shifts left.
D)fall. The demand for loanable funds shifts left.
Q4) Refer to Scenario 13-2. For this economy, private saving is equal to
A)$40,000.
B)$50,000.
C)$55,000.
D)$60,000.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: The Basic Tools of Finance
Available Study Resources on Quizplus for this Chatper
419 Verified Questions
419 Flashcards
Source URL: https://quizplus.com/quiz/49086
Sample Questions
Q1) Diversification of a portfolio
A)can eliminate market risk, but it cannot eliminate firm-specific risk.
B)can eliminate firm-specific risk, but it cannot eliminate market risk.
C)increases the portfolio's standard deviation.
D)is not necessary for a person who is risk averse.
Q2) Refer to Figure 14-3. From the appearance of Rob's utility function, we know that
A)if Rob owns a house, then he definitely would buy fire insurance provided the cost of the insurance were reasonable.
B)Rob would voluntarily exchange a portfolio of stocks with a high average return and a high level of risk for a portfolio with a low average return and a low level of risk.
C)Rob is risk averse.
D)Rob is not risk averse.
Q3) If Cara's utility falls more by losing $600 than it rises by gaining $600, she has
A)increasing marginal utility of wealth and is risk averse.
B)increasing marginal utility of wealth but is not risk averse.
C)decreasing marginal utility of wealth and is risk averse.
D)decreasing marginal utility of wealth but is not risk averse.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Unemployment
Available Study Resources on Quizplus for this Chatper
571 Verified Questions
571 Flashcards
Source URL: https://quizplus.com/quiz/49087
Sample Questions
Q1) Frictional unemployment is often the result of changes in the demand for labor among different firms.
A)True
B)False
Q2) Refer to Table 15-2. What was Baltivia's labor-force participation rate in 2009?
A)55 percent
B)63 percent
C)66.9 percent
D)87.3 percent
Q3) The destruction of manufacturing jobs and workers leaving their jobs to find better ones both contribute to structural unemployment.
A)True
B)False
Q4) U.S. Department of Labor data show that minimum-wage workers tend to be young, less educated, more likely to be working part time, and concentrated in the leisure and hospitality industry.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: The Monetary System
Available Study Resources on Quizplus for this Chatper
423 Verified Questions
423 Flashcards
Source URL: https://quizplus.com/quiz/49088
Sample Questions
Q1) When the Federal Reserve sells assets from its portfolio to the public with the intent of changing the money supply,
A)those assets are government bonds and the Fed's reason for selling them is to increase the money supply.
B)those assets are government bonds and the Fed's reason for selling them is to decrease the money supply.
C)those assets are items that are included in M2 and the Fed's reason for selling them is to increase the money supply.
D)those assets are items that are included in M2 and the Fed's reason for selling them is to decrease the money supply.
Q2) The Fed purchases $200 worth of government bonds from the public. The reserve requirement is 8 percent, people hold no currency, and the banking system keeps no excess reserves. The U.S. money supply eventually increases by A)$16.
B)$200.
C)$1,600.
D)$2,500.
Q3) Compare the Board of Governors and the Federal Open Market Committee.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Money Growth and Inflation
Available Study Resources on Quizplus for this Chatper
388 Verified Questions
388 Flashcards
Source URL: https://quizplus.com/quiz/49089
Sample Questions
Q1) Walter puts money in a savings account at his bank earning 3.5 percent. One year later he takes his money out and notes that while hus money was earning interest, prices rose 1.5 percent. Walter earned a nominal interest rate of
A)3.5 percent and a real interest rate of 5 percent.
B)3.5 percent and a real interest rate of 2 percent.
C)5 percent and a real interest rate of 3.5 percent
D)5 percent and a real interest rate of 2 percent
Q2) Darla puts her money into a bank account that earns interest. One year later she sees that the account has 6 percent more dollars and that her money will buy 7.5 percent more goods.
A)The nominal interest rate was 13.5 percent and the inflation rate was 7.5 percent.
B)The nominal interest rate was 13.5 percent and the inflation rate was 1.5 percent.
C)The nominal interest rate was 6 percent and the inflation rate was -1.5 percent.
D)The nominal interest rate was 6 percent and the inflation rate was 7.5 percent.
Q3) List and define any two of the costs of high inflation.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Open-Economy Macroeconomic Models
Available Study Resources on Quizplus for this Chatper
448 Verified Questions
448 Flashcards
Source URL: https://quizplus.com/quiz/49090
Sample Questions
Q1) You are planning a graduation trip to Nepal. Other things the same, if the dollar depreciates relative to the Nepalese rupee, then
A)the dollar buys fewer rupees. Your purchases in Nepal will require fewer dollars.
B)the dollar buys fewer rupees. Your purchases in Nepal will require more dollars.
C)the dollar buys more rupees. Your purchases in Nepal will require fewer dollars.
D)the dollar buys more rupees. Your purchases in Nepal will require more dollars.
Q2) Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales
A)are an export of the U.S. and increase U.S. net exports.
B)are an export of the U.S. and decrease U.S. net exports.
C)are an import of the U.S. and increase U.S. net exports.
D)are an import of the U.S. and decrease U.S. net exports.
Q3) If a U.S. textbook publishing company sells texts overseas, U.S. net exports
A)increase, and U.S. net capital outflow increases.
B)increase, and U.S. net capital outflow decreases.
C)decrease, and U.S. net capital outflow increases.
D)decrease, and U.S. net capital outflow decreases.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: A Macroeconomic Theory of the Open Economy
Available Study Resources on Quizplus for this Chatper
374 Verified Questions
374 Flashcards
Source URL: https://quizplus.com/quiz/49091
Sample Questions
Q1) Other things the same, people in the U.S. would want to save more if the real interest rate in the U.S.
A)fell. The increased saving would increase the quantity of loanable funds demanded.
B)fell. The increased saving would increase the quantity of loanable funds supplied.
C)rose. The increased saving would increase the quantity of loanable funds demanded.
D)rose. The increased saving would increase the quantity of loanable funds supplied.
Q2) If the government of Colombia made policy changes that increased national saving, the real exchange rate of the peso would
A)depreciate and Colombian net exports would rise.
B)depreciate and Colombian net exports would fall.
C)appreciate and Colombian net exports would rise.
D)appreciate and Colombian net exports would fall.
Q3) Capital flight shifts the NCO curve to the left.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Aggregate Demand and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
471 Verified Questions
471 Flashcards
Source URL: https://quizplus.com/quiz/49092
Sample Questions
Q1) The sticky-price theory implies that
A)the short-run aggregate-supply curve is upward-sloping.
B)an unexpected fall in the price level induces firms to reduce the quantity of goods and services they produce.
C)menu costs influence the speed of adjustment of prices.
D)All of the above are correct.
Q2) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the minimum wage as well as an increase in pessimism about future business conditions, then we would expect that in the short-run,
A)real GDP will rise and the price level might rise, fall, or stay the same.
B)real GDP will fall and the price level might rise, fall, or stay the same.
C)the price level will rise, and real GDP might rise, fall, or stay the same.
D)the price level will fall, and real GDP might rise, fall, or stay the same.
Q3) Tax cuts shift aggregate demand
A)right as do increases in government spending.
B)right while increases in government spending shift aggregate demand left.
C)left as do increases in government spending.
D)left while increases in government spending shift aggregate demand right.
Q4) Make a list of expenditures whose sum equals GDP.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: The Influence of Monetary and Fiscal Policy on Aggregate Demand
Available Study Resources on Quizplus for this Chatper
416 Verified Questions
416 Flashcards
Source URL: https://quizplus.com/quiz/49093
Sample Questions
Q1) When government expenditures increase, the interest rate
A)increases, making the change in aggregate demand larger.
B)increases, making the change in aggregate demand smaller
C)decreases, making the change in aggregate demand larger.
D)decreases, making the change in aggregate demand smaller.
Q2) Suppose that there are no crowding-out effects and the MPC is .9. By how much must the government increase expenditures to shift the aggregate demand curve right by $10 billion?
Q3) Initially, the economy is in long-run equilibrium. The aggregate demand curve then shifts $80 billion to the left. The government wants to change spending to offset this decrease in demand. The MPC is 0.75. Suppose the effect on aggregate demand of a tax change is 3/4 as strong as the effect of a change in government expenditure. There is no crowding out and no accelerator effect. What should the government do if it wants to offset the decrease in real GDP?
A)Raise both taxes and expenditures by $80 billion dollars.
B)Raise both taxes and expenditures by $10 billion dollars.
C)Reduce both taxes and expenditures by $80 billion dollars.
D)Reduce both taxes and expenditures by $10 billion dollars.
Q4) Explain how unemployment insurance acts as an automatic stabilizer.
Q5) What is the difference between monetary policy and fiscal policy?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: The Short-Run Trade-Off Between Inflation and Unemployment
Available Study Resources on Quizplus for this Chatper
400 Verified Questions
400 Flashcards
Source URL: https://quizplus.com/quiz/49094
Sample Questions
Q1) The position of the long-run Phillips curve depends on
A)the inflation rate and the natural rate of unemployment.
B)the inflation rate but not the natural rate of unemployment.
C)the natural rate of unemployment, but not the inflation rate.
D)neither the natural rate of unemployment nor the inflation rate.
Q2) In the late 1970s, proponents of rational expectations argued that
A)the Fed should not attempt to aggressively fight inflation.
B)the sacrifice ratio was smaller than previously thought.
C)the short run was relatively long.
D)None of the above is correct.
Q3) The experience of the Volcker disinflation of the early 1980s
A)generally increased estimates of the sacrifice ratio.
B)generally decreased estimates of the sacrifice ratio.
C)clearly refuted the predictions of the proponents of rational expectations.
D)clearly refuted the predictions of the opponents of rational expectations.
Q4) In the short run, policy that changes aggregate demand changes
A)both unemployment and the price level.
B)neither unemployment nor the price level.
C)only unemployment.
D)only the price level.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Six Debates Over Macroeconomic Policy
Available Study Resources on Quizplus for this Chatper
235 Verified Questions
235 Flashcards
Source URL: https://quizplus.com/quiz/49095
Sample Questions
Q1) Economists agree that if a monetary policy rule is to be used, the best one makes the growth rate of the money supply constant.
A)True
B)False
Q2) Which of the following is not an argument in favor of requiring the government to balance its budget?
A)Government debt imposes higher taxes or more borrowing on future generations.
B)A balanced budget will smooth the business cycle.
C)Deficits lower national saving.
D)Recent history shows that Congress will run deficits even when deficits are not justified by war or recession.
Q3) Explain how a higher rate of return on saving could, at least in theory, lead to lower saving.
Q4) As compared to government spending, spending generated by a tax cut is likely to affect aggregate demand
A)more quickly and more likely to be spent on projects with little benefit.
B)more quickly but less likely to be spent on projects with little benefit.
C)less quickly but more likely to be spent on projects with little benefit.
D)less quickly and more likely to be spent on projects with little benefit.
To view all questions and flashcards with answers, click on the resource link above. Page 25