Answer the following statement(s) true (T) or false (F)
1. A budget surplus occurs if the amount of government spending is greater than the amount of tax revenues during a fiscal year.
2. The term "full employment" means that the unemployment rate is equal to zero.
3. Contractionary policies stimulate the economy to grow.
4. If the European economy is booming and US exports increase, aggregate demand (AD) increases.
5. Efficiency wages, a Keynesian theory of unemployment, posits that wages higher than the equilibrium wage are a cause of unemployment.
1. False
2. False
3. False
4. True
5. True
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Other things being equal, the less elastic demand is: a. the lower the deadweight loss is resulting from the imposition of a given tax on a product. b. the greater the burden is of the tax borne by consumers
c. the greater the tax revenue collected by the government is. d. all of the above
Government action will often result in the counterproductive use of resources because
a. there is often a conflict between winning political elections and adoption of only productive programs. b. many politicians are not interested in how their legislative votes will influence their chances of winning future elections. c. politicians are often unwilling to listen to interest groups that have specialized knowledge. d. voter participation is low; if more people voted, the political process would be more efficient.