Mathematically, the value of the spending multiplier in terms of the marginal propensity to consume (MPC) is given by the formula:

The value of bonds outstanding

A) increases when the government runs a budget deficit and decreases when the government runs a budget surplus. B) decreases when the government runs a budget deficit and increases when the government runs a budget surplus. C) is independent of the government running either a budget deficit or a budget surplus. D) changes only when the government runs a budget deficit or surplus if the federal debt is zero.

Economic profits and losses are true market signals because they

A) convey information in an asymmetrical fashion. B) convey information about rewards people should anticipate experiencing by shifting resources from one activity to another. C) convey information to public officials about where to encourage people to invest and what skills people should develop. D) cause people to move into careers in both undesirable and desirable industries with equal ease.