To correct the budget deficit for inflation, we should
A. multiply the budget deficit by the price deflator for GDP.
B. subtract interest payments from tax revenues.
C. divide the budget deficit by nominal GDP.
D. divide the budget deficit by the consumer price index.
Answer: C
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The long-run aggregate supply curve of an economy corresponds to
A) a point inside the production possibilities curve. B) a point outside the production possibilities curve. C) a point on the production possibilities curve. D) none of the above: there is no relationship between the long-run aggregate supply curve and the production possibilities curve.
The law of diminishing marginal returns states that as the quantity of capital per worker increases, other things constant, output per worker eventually: a. increases at a constant rate
b. increases at a decreasing rate. c. increases at an increasing rate. d. decreases. e. remains constant.