To evaluate the size of the federal budget deficit or surplus over time, it would be best to look at the
A) absolute size of the budget deficit or surplus.
B) budget deficit or surplus as a percentage of GDP.
C) budget deficit or surplus as a percentage of tax revenues.
D) budget deficit or surplus as a percentage of government spending.
Answer: B
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When demand is elastic, a decrease in price will
A) decrease total revenue. B) not change total revenue. C) increase total revenue. D) reduce quantity demanded.
The rational expectations hypothesis suggests that
A) people are creatures of habit and tend not to change their economic behavior in the short run. B) people are rational if they make forecasts about economic activity. C) people use all available information to make forecasts about future economic activity and adjust their behavior to these forecasts. D) people use all available information to make forecasts about future economic activity but often fail to adjust their behavior to these forecasts.