Macroeconomics Questions

According to the classical​ model, if an excess quantity of labor is supplied at a particular wage​ level, full employment will be maintained becauseA.the government will establish special work programs.B.wages will fall rapidly to permit businesses to continue hiring everyone who wants to work.C.the government will step in and stimulate spending.D.the equilibrium wage rate will rise to stimulate spending.

Since 1970 the U.S.​ government's budget deficit as a percentage of real GDP hasA.alternated almost every other year from positive to negative.B.been negative in most years.C.hovered around​ 40%.D.averaged approximately​ 3%.

Suppose that the economy is currently operating at full employment as depicted in the graph to the right.Using the line drawing tool​, show the effect on the economy if it were to run a federal budget surplus due to contractionary fiscal policy. Properly label this line.Carefully follow the instructions​ above, and only draw the required objects.​Thus, in the​ short-run the economy will experienceA.arecessionarygap.B.aninflationarygap.Your answer is not correct.C.inflation.D.lowerunemployment.

Which of the following is an example of a stock ​variable?A.Income.B.Saving.C.The government debt.D.Investment.

EntitlementsA.are used to finance public goods.B.include payments for Medicare and other health programs such as Medicaid.C.have been eliminated from the budget.D.have trended downward since the mid−1950s.

Which of the following is a possible explanation for sticky​ prices?A.Lack of union power to lower prices on products allows firms to maintain higher priced goods.B.It is illegal for firms to lower prices without the consent of the courts.C.Labor contracts cause wages to be fixed over the contract period.D.All firms act as a cartel and maintain a constant​ non-competitive price.

bThe​ long-run effect of higher government budget deficits on the equilibrium annual flow of real GDP is zero.​ Who, therefore, benefits in the long run from higher government​ deficits?Those who benefit in the long run from higher budget deficits areA.those who receive the larger share of the annual flow of real GDP to​ government-provided goods and services—that ​is, those to whom these goods and services are not redistributed.B.those who receive the larger share of the annual flow of real GDP to​ government-provided goods and services—that ​is, those to whom these goods and services are redistributed.C.those who receive the smaller share of the annual flow of real GDP to​ government-provided goods and services—that ​is, those to whom these goods and services are redistributed.D.those who receive the smaller share of the annual flow of real GDP to​ government-provided goods and services—that ​is, those to whom these goods and services are not redistributed

Grosspublic debtA.increases whenever the federal government experiences a budget deficit.Your answer is not correct.B.is net public debt plus interest that the government must pay to those who hold the bonds it has issued to finance past budget deficits.C.is all federal public debt.D.is net public debt plus the portion of the debt the U.S. government owes to U.S. citizens.

Which of the following is a reason why the public debt may impose a burden on future​ generations?A.Future generations will not have as much income as current generations.B.Future taxes mayhave to be increased to repay the debt.C.Current government spending is not used for infrastructure and capital investment.D. Foreign owners of U.S. debt will not spend their income on U.S. products.

By most​ measures, the aggregate indebtedness of all national governments currently exceeds 60 percent of global GDP. In what way could this unusually large government debt create a​ "burden" for future​ generations?If the accumulation of additional global debt crowds out​ investment, the stock of capital goods will​ ________.The result for future generations would be​ ________ rates of global economic growth.A.​rise; increasedB.​fall; marginalC.​fall; reducedD.remain the​ same; no

It may be argued that the effects of a higher public debtLOADING... are the same as the effects of a higher deficit becauseA.a higher deficit creates a higher public debt.B.both lower interest rates.C.both lower investments by foreign nationals.D.both lower current GDP.

To eliminate the deficit​ (and halt the growth of the net public​ debt), a politician suggests that​ "we should tax the​ rich." The politician makes a simple arithmetic calculation in which he applies the higher tax rate to the total income reported by​ "the rich" in a previous year. He says that this is how much the government could receive from increasing taxes on​ "the rich." This argument has been proved wrong because of all the following​ statements, exceptA.that increasing the marginal tax rate on the​ "rich" has so far produced unimpressive results.B.that the​ "rich" will have more incentive to incorporate themselves and pay a lower corporate profit tax rate.C.that the​ "rich" will use a​ deferred-compensation plan to shift income to future years when their tax rates may be lower.D.that taxing​ "the rich," since they have higher​ earnings, is the answer to solving the problem of a growing deficit.

What is the relationship between the gross public debtLOADING... and the net public​ debt?A.The net public debt only included government debt held by the public.B.The gross public debt is equal to the net public debt plus current deficits or less budget surpluses.C.The net public debt only includes government debt held by domestic institutions and individuals.D.The gross public debt does not include government debt held by​ inter-governmental agencies.

Imagine that the net public debt of a​ country's government was currently​ $6 trillion. The debt was entirely held or owned by the citizens of that country. In other​ words, there is no external debt. If the government were to pay off the entire​ $6 trillion of debt today by the use of​ taxes, which of the following statements is true​?A.Individuals and firms owning more of the debt than their share in taxes needed to pay off the debt have realized an increase in their disposable income.B.Individuals and firms owning less of the debt than their share in taxes needed to pay off the debt have realized a decrease in their disposable income.C.Both of these statements are true.D.Neither of these statements is true.

Which of the following is the definition of the public debt​?A.The total value of all outstanding government securities.B.An excess of government revenues over spending during a given period of time.C.An excess of government spending over revenues during a given period of time.D.The total of all past and future tax collections.

Net exports (do/do not) change with our GDP

How is spending affected when the economy slows down?

How is unemployment affected when the economy slows down?

How is GDP affected when the economy slows down?

If the consumer price index (CPI) in year 1 was 200 and the CPI in year 2 was 215, the rate of inflation was