Explain why debt is usually measured using the debt-to-GDP ratio rather than the absolute amount of debt
What will be an ideal response?
Economists believe that the debt-to-GDP ratio does a better job of measuring whether the debt is large or small and in determining whether fiscal policy is sustainable. The debt-to-GDP ratio gives a better measurement of the ability of a government to be able to pay its debt.
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The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. Producing and consuming the efficient quantity of coffee in Kaffenia means that
A) the marginal social cost of the last pound of coffee is at the lowest possible value. B) the marginal social benefit of the last pound of coffee is at its highest possible value. C) to produce more coffee, the marginal social benefit of an additional pound of coffee is less than its marginal social cost. D) All of the above are correct.
The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as
A) fiscal policy. B) monetary policy. C) an automatic mechanism. D) "releasing sticky prices."