According to Keynes' philosophy of government budgets, _____
a. chronic deficits accumulate into a national debt
b. permanent surpluses are desirable
c. fiscal policy focuses on maintaining an annually balanced budget
d. deficits dampen aggregate demand in the short run and reduce the federal debt
e. deficits are appropriate during recessions
e
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Young drivers often buy used cars. An increase in the legal driving age to twenty-one would result in a leftward movement along the demand curve for used cars, whereas lowering the age to fifteen would result in a rightward movement along the demand
curve. Indicate whether the statement is true or false
Active stabilization policy can be rationalized in the New Keynesian model because
A) it makes it possible to obtain zero inflation. B) the government knows best. C) it counteracts the influence of unions. D) it allows a faster return to economic efficiency.
A self-enforcing agreement:
A. describes an agreement in which every party involved has an incentive to abide by it, assuming that others do the same. B. requires a contract. C. describes the strategy that makes up a Nash equilibrium. D. describes the strategy that makes up a Nash equilibrium and describes an agreement in which every party involved has an incentive to abide by it, assuming that others do the same.
Which of the following statements about the real loanable funds market is not true?
a. Movements in the real risk-free interest rate cause significant changes in borrowers' willingness and ability to tap the domestic credit market if the demand is highly elastic. b. The more inelastic a nation's supply of real loanable funds, the less sensitive domestic savers, banks, foreigners, and governments are to changes in the real risk-free interest rate. c. Monetary policy is usually stronger in nations with inelastic real loanable funds demands. d. Fiscal policy is usually weaker in nations with elastic real loanable funds demands. e. All of the above are true.