Explain why the actual deficit is a poor measure of fiscal policy.
What will be an ideal response?
The actual deficit reflects not only the structure of taxes and government spending programs, but also the state of the economy. During a contraction, tax revenues drop and government spending rises, contributing to a deficit budget. This deficit may be the result only of automatic stabilizers and recessionary conditions. If the budget is structured so that the deficit would become a surplus before the economy reached the full-employment level of income, then the budget is acting as a force to prevent attaining full employment. Thus, the government would actually be pursuing a contraction policy.
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What is the most accurate statement about the fraction of the US population that lived in urban areas between 1800 and 1910?
a. The fraction of the US population that lived in urban areas grew steadily throughout the period. b. The fraction of the US population that lived in urban areas decreased steadily throughout the period. c. In 1910, about 85% of the US population lived in cities over 100,000 people. d. In 1800, more than half of the US population lived in towns over 2,500 people.
A simultaneous decrease in both the demand for MP3 players and the supply of MP3 players would imply that
a. both the value of MP3 players to consumers and the cost of producing MP3 players has increased. b. both the value of MP3 players to consumers and the cost of producing MP3 players has decreased. c. the value of MP3 players to consumers has decreased, and the cost of producing MP3 players has increased. d. the value of MP3 players to consumers has increased, and the cost of producing MP3 players has decreased.