A recessionary gap causes national debt to increase because
A. the growth in GDP slows.
B. interest on previously incurred debt must be paid.
C. recessionary periods require huge buildups of defense materials.
D. income tax receipts drop off markedly.
Answer: D
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Suppose that the size of the labor force is 100 million and that the unemployment rate is 5 per cent. Which of the following actions would reduce the unemployment rate the most?
A. 1 million unemployed people get jobs B. 2 million unemployed people leave the labor force C. 3 million people join the labor force and they all get jobs D. 10 million people join the labor force and half of them get jobs
Markets fail to maximize total surplus when:
A. society's choices impose costs or benefits on other societies. B. individual choices impose costs or benefits on others. C. when all costs and benefits are received by participants in transactions. D. producer surplus is not exactly equal to consumer surplus.