One of the dangers of growing government debt is that:
A. it makes monetary policy more difficult by tying up more of the money supply in loans to the government.
B. it pushes down interest rates which can lead to overspending by households and businesses.
C. more of the budget goes to pay interest on the debt, making it harder to act in a future recession.
D. debts have to be repaid with future income.
Ans: C. more of the budget goes to pay interest on the debt, making it harder to act in a future recession.
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In an open economy with global capital markets and mobile capital:
A) a country has control over both its domestic money supply and exchange rate. B) a country has control of either its domestic money supply or exchange, but not both. C) a country only has control over its domestic money supply. D) a country only has control over its exchange rate.
During the 1950s and 1960s, the national debt as a percent of GDP in the United States
a. soared to an all-time high. b. declined. c. increased. d. was virtually unchanged.
If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,
a. firms would respond by lowering their costs. b. firms would require a subsidy to stay in business c. new firms that enter the market would operate at efficient scale. d. the most efficient firms would not be affected.
Changes in the price of an input cause:
A. isoquants to become steeper. B. parallel shifts of the isocost lines. C. changes in both the isoquants and isocosts of equal magnitude. D. slope changes in the isocost line.