Use the concept of supply and demand to explain why an increase in Medicare subsidies can lead to an increase in health care spending by the government
What will be an ideal response?
Medicare reduces the price that the elderly people have to pay for health services, so that an increase in the subsidy will lead to an increase in the quantity demanded of health services. As a result, the government ends up paying more in total health care spending.
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Which variable is assumed to remain exogenous in all the models constructed in Chapters 3 and 4?
A) the money supply B) the interest rate C) the price level D) the equilibrium GDP E) autonomous consumption
Macroeconomic theory can be helpful to business managers, because:
a. It is like a crystal ball showing the future. b. It can reduce the odds of making bad decisions and increase the odds of making goods ones. c. It shows how the future is rather predictable, and by using these tools, countless riches can be made. d. It has been shown to be a highly accurate way of forecasting economic activity. e. All of the above.