If the Nongovernment Share of GDP Shifts to the Right

question 2

Multiple Choice

If the nongovernment share of GDP shifts to the right and the government share of GDP remains constant, then

• A)there must be an increase in taxes.
• B)the dollar exchange rate must weaken.
• C)there must be a decrease in taxes.
• D)the interest rate decreases.
• E)the interest rate increases.

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Definitions:

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, using the average of the initial and final quantities and prices to determine the percentage change.

Inelastic

Refers to a scenario in which the demand or supply for a product or service is relatively insensitive to price fluctuations.

Price Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a price change.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply between two points on a curve by using the average of the initial and final quantities and prices.