Answer the following statements true (T) or false (F)
1) Permanent tax reductions are more likely to be expansionary than temporary tax reductions.
2) As measured by the cyclically adjusted budget, the U.S. government engaged in a
contractionary fiscal policy in 2005 and 2006.
3) Financing wartime expenditures by increasing internally held public debt permits a nation to
defer a part of the economic cost of war.
4) It is more meaningful economically to measure the public debt relative to the GDP than to
measure it in absolute terms.
1) T
2) F
3) F
4) T
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A balance of payments deficit occurs if
A) the demand for a nation's currency exceeds the supply of the currency at the current exchange rate. B) exports exceed imports. C) the supply of a nation's currency is equal to the demand for the currency at the current exchange rate. D) the supply of a nation's currency exceeds the demand for the currency at the current exchange rate.
With price discrimination, a monopoly
A) converts consumer surplus into economic profit. B) converts producer surplus into economic profit. C) can charge a single price to all customers. D) produces less output than if it does not price discriminate. E) converts consumer surplus into deadweight loss.