Suppose the U.S. government has an annual budget of about $4 trillion. Does the U.S. government face the problem of scarcity?
A. No, a government with $4 trillion in spending faces no real constraints.
B. No, scarcity does not apply to governments.
C. Yes, resources are limited even for the U.S. government.
D. Yes, although the U.S. government can easily obtain more resources.
E. Uncertain, economic theory has no answer to this question.
Answer: C
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Refer to Figure 28-2. Suppose the Fed used expansionary policy to push short-run equilibrium to point B. If the short-run equilibrium remained at point B long enough
A) the short-run Phillips curve would shift down. B) the short-run Phillips curve would shift up. C) the economy would stay at point B in the long run. D) the economy would move back to point A.
Tariffs are frequently used in less-developed countries because _____
a. the governments need more revenue b. the governments want to encourage exports c. the governments find it easier to monitor border transactions than interior transactions d. the governments prefer to tax goods over services