When government spending and tax revenue are equal, G = T, the economy
a. must be in equilibrium
b. has achieved full employment without inflation
c. has a budget deficit
d. has a budget surplus
e. has a balanced budget
E
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Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12 utils and the last bagel 6 utils. If the price of a cup of coffee is $1 and the price of the bagel is $.50, we can conclude that the:
a. consumer should consume more coffee and fewer bagels. b. price of coffee is too high relative to bagels. c. consumer should consume less coffee and more bagels. d. consumer is in equilibrium.
A factor that limits the amount of saving in developing countries is the fact that:
A. The banking system does not encourage saving B. There is too much foreign aid so savings is not needed C. The level of aggregate domestic output is low D. The government controls financial institutions and makes it difficult for people to save