A decrease in government spending would cause all but one of the following to happen. Which is the exception?
a. The government's budget deficit would shrink.
b. The interest rate would decrease.
c. Consumption spending would increase.
d. Investment spending would increase.
e. Total output would decrease.
E
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An increase in income causes compensated demand curves to shift inward and regular demand curves to shift outward.
Answer the following statement true (T) or false (F)
An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering
A) by flooding the market with products below its marginal cost in the short run. B) if learning by doing reduces marginal cost. C) if the long-run marginal cost can be lowered below the potential entrant's short-run marginal cost. D) All of the above.
Exhibit 8-6 Consumption function
?
In Exhibit 8-6, when disposable income is equal to zero, saving is equal to:
A. $0. B. $100. C. ?$50. D. ?$100.
We saw in the text that regulations, specifically deposit insurance and the base Accord (of 1988), can create moral hazard. Explain.
What will be an ideal response?