A rule of thumb is that a 1% increase in output leads automatically to a reduction in the deficit of what percentage of GDP?

What impact would the Fed's raising the interest rate have on any inflationary pressure in the economy?

A) An increase in interest rates decreases the money demand, which could slow increases in the price level. B) An increase in interest rates decreases the exchange rate, which causes net exports to rise, generating inflation. C) An increase in interest rates increases real GDP, which creates inflation in an economy. D) An increase in interest rates increases the money supply, which could cause the price level to increase.

A common resource is best described as a resource where

A) there is a positive externality in consumption. B) there is a negative externality in consumption. C) there is a positive externality in production. D) there is a negative externality in production.