From the End of 2003 to the End of 2004

question 230

Multiple Choice

From the end of 2003 to the end of 2004, the United States ran a deficit of about $121 billion. The debt at the start of this period was about $3,924 billion. Which of the following combinations of inflation and real GDP would have allowed the government to run a deficit and kept the ratio of real GDP to the deficit about the same?

• A)about 1% inflation and about 1% real GDP growth
• B)about 1% inflation and about 3% real GDP growth
• C)about 2% inflation and about 1% real GDP growth
• D)about 2% inflation and about 2% real GDP growth

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Definitions:

Significant Barriers

Major obstacles or impediments that prevent entities from entering a market or industry.

Horizontal Demand Curve

A demand curve representing a situation where a small change in price leads to an infinite change in quantity demanded, typically associated with perfectly competitive markets.

Four-Firm Concentration Ratio

A measure that indicates the total market share controlled by the four largest firms within an industry.

Herfindahl Index

A measure of market concentration calculated by summing the squares of the market shares of all firms in the industry.