How does inclusion of the current revenues and expenditures of the Social Security trust fund into the budget calculation affect the reported budget deficit of the federal government when the trust fund experiences a surplus?
A. It increases the reported deficit.
B. It reduces the reported deficit.
C. It exerts no effect on the reported deficit.
D. It increases the deficit during an economic boom but reduces it during a recession.
Answer: B
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The problem of a double coincidence of wants refers to
A) the insatiability of wants in a free market economy. B) poorly-managed companies producing what consumers want only by coincidence. C) the necessity in a barter system of each trading partner wanting what the other has to trade. D) the likelihood that needs will not be the same as wants.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline