The difference between net public debt and gross public debt is
A) all government interagency borrowing.
B) the interest paid annually on the public debt.
C) the amount owed to individuals and firms outside the United States.
D) the current year's budget deficit from the amount of public debt at the start of the year.
A
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When a government turns a deficit into a surplus we would expect
A) interest rates to rise. B) interest rates to decrease. C) the demand curve for loanable funds to shift rightward. D) that more investment is crowded out.
In the presence of a negative externality
a. the market marginal benefit curve lies above the market supply curve b. a market will produce less than the efficient quantity c. the market price will be too high for an efficient solution to exist d. the marginal social cost curve lies above the market supply curve e. Pareto optimality is automatically guaranteed
In a multiple exchange-rate system, the government determines which kinds of transactions are to be conducted at which exchange rate.
a. true b. false
Which of the following is NOT part of classical economic theory?
A. Saving depends upon the rate of interest. B. Full employment is the norm in laissez-faire capitalism. C. Wages and prices are inflexible downward. D. The equilibrium interest rate equals saving and investment. E. Supply creates its own demand.