Austerity advocates argue that stimulus measures paid for with borrowed money:
A. are the best way to speed up an economic recovery.
B. will lead to a reduction in the government budget deficit.
C. will lead to substantial inflation and sharply higher interest rates.
D. will generate substantial tax revenue for the government.
Answer: C
You might also like to view...
The supply of product X is elastic if
A. an 8% increase in price generates an 8% increase in quantity supplied. B. a 10% decrease in price does not affect quantity supplied. C. a 5% increase in price generates a 7% increase in quantity supplied. D. a 7% decrease in price generates a 5% decrease in quantity supplied.
A commercial bank has actual reserves of $1 million and checkable-deposit liabilities of $9 million, and the required reserve ratio is 10%. The excess reserves of the bank are
A. $900,000. B. $1 million. C. $100,000. D. $50,000.
That most used cars are sold by intermediaries (i.e., used car dealers) provides evidence that these intermediaries
A) have been afforded special government treatment, since used car dealers do not provide information that is valued by consumers of used cars. B) are able to prevent potential competitors from free-riding off the information that they provide. C) have failed to solve adverse selection problems in this market because "lemons" continue to be traded. D) have solved the moral hazard problem by providing valuable information to their customers.
Which of the following must occur as a result of ceilings on apartment rents that are set below market clearing rental rates?
A) Property owners respond to the ceilings by increasing maintenance and repairs. B) Property owners respond to the ceilings by constructing new apartment buildings. C) There is a decrease in the quantity of apartments that prospective tenants wish to rent. D) There is a decrease in the quantity of apartments that property owners offer for rent.