If tax revenue is $230 billion and the government's outlays are $235 billion, then the budget
A) deficit is $5 billion, and government debt will remain the same.
B) surplus is $5 billion, and government debt will increase by $5 billion.
C) deficit is $5 billion, and government debt will increase by $5 billion.
D) deficit is $5 billion, and government debt will decrease by $5 billion.
E) surplus is $230 billion, and the budget deficit is $235 billion.
C
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If a person supplies fewer hours of labor in response to a wage increase, then
A) the substitution effect is greater than the income effect. B) the income effect is greater than the substitution effect. C) the income effect equals the substitution effect. D) the person is not maximizing utility.
The idea that changes in investment and changes in national income are mutually reinforcing is the foundation of
a. the sunspot theory b. the war-induced cycle c. the housing cycle d. the innovation cycle e. internally generated cycles