Principles Of Microeconomics 2e
Principles Of Microeconomics 2e
2nd Edition
ISBN: 9781680922219
Author: Timothy Taylor, Steven A Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 6, Problem 10RQ

What is the rule relating the ratio of marginal utility to prices of two goods at the optimal choice? Explain why, if this rule does not hold, the choice cannot be utility-maximizing

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Analyze the graph below, showing the Gross Federal Debt as a percentage of GDP for the United States (1939-2019). Which of the following is correct? FRED Gross Federal Debt as Percent of Gross Domestic Product Percent of GDP 120 110 100 60 50 40 90 30 1940 1950 1960 1970 Shaded areas indicate US recessions 1980 1990 2000 2010 1000 Sources: OMD, St. Louis Fed myfred/g/U In 2019, the Federal Government of the United States had an accumulated debt/GDP higher than 100%, meaning that the amount of debt accumulated over time is higher than the value of all goods and services produced in that year. The debt/GDP is always positive during this period, so the Federal Government of the United States incurred in budget deficits every year since 1939. From the mid-40s until the mid-70s, the debt/DGP was decreasing, meaning that the Federal Government of the United States was running a budget surplus every year during those three decades. During the second half of the 1970s, the Federal Government…
An imaginary country estimates that their economy can be approximated by the AD/AS model below. How can this government act to move the equilibrium to potential GDP? LRAS Price Level P Y Real GDP E SRAS AD The AD/AS model shows that a contractionary fiscal policy is suitable, but the choice of increasing taxes, decreasing government expenditure or doing both simultaneously is mostly political The AD/AS model shows that increasing taxes is the best fiscal policy available. The AD/AS model shows that decreasing government expenditure is the best fiscal policy available. The AD/AS model shows that an expansionary fiscal policy capable of shifting the AD curve to the potential GDP level would decrease Real GDP but increase inflationary pressures

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