Suppose there was a debate regarding how to spend $1 billion in newly found revenues in the budget. Suppose the centrist Democrat suggests an increase to infrastructure spending. Suppose the centrist Republican suggests an increase in cyber-defense spending. The Democrat says that the extra infrastructure spending will decrease travel times and be the most valuable. The Republican is arguing that, on average, cyber-security is worth the money, so more is better. What is going on here?
A. Neither are using marginal analysis.
B. Only the Democrat is using marginal analysis.
C. Only the Republican is using marginal analysis.
D. Both are employing marginal analysis, just from different perspectives.
Answer: B
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Which of the following is NOT an advantage of a correctly specified structural model?
A) Structural models may help us to more accurately predict the effect that monetary policy has on economic activity. B) A structural model provides more pieces of evidence about monetary policy's effect on economic activity. C) Structural models may allow economists to more accurately predict the impact institutional changes have on the link between monetary policy and income. D) A structural model imposes no restrictions on the way monetary policy affects the economy.
When the actual exceeds the natural unemployment rate, this means that we have ________ unemployment
A) positive structural B) negative structural C) positive cyclical D) negative cyclical