What is a government's budget constraint in the long run as opposed to a given time period?
What will be an ideal response?
In a given time period, the government budget constraint is the limitation on public expenditures, which is the total amount of tax revenues plus borrowed funds. However, a government cannot borrow forever, so that its constraint in the long run is simply tax revenues.
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It is frequently observed that when a city is located next to a major highway, gas stations located close to the highway charge higher prices than gas stations located farther away. This is an example of:
A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) illegal price discrimination.
Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:
A. real GDP will rise more rapidly than nominal GDP. B. GDP will tend to increasingly understate the level of output through time. C. GDP will tend to increasingly overstate the level of output through time. D. the accuracy of GDP will be unaffected through time.