The Ricardo-Barro effect says that
A) government budget deficits have no crowding out effect because taxpayers increase their savings to match the quantity of loanable funds demanded by the government.
B) government budget deficits crowd out private investment and thereby lower the real interest rate.
C) government budget deficits resulting from an increase in government expenditure have no effect on investment but government deficits resulting from a decrease in taxes crowd out investment.
D) government budget deficits cause households to save more in anticipation of higher taxes, which causes higher real interest rates.
A
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The price elasticity of demand is always positive, as is the price elasticity of supply. Is the cross elasticity of demand always positive? Explain your answer
What will be an ideal response?
The difference between merchandise exports and imports is called the ________ balance
A) current account B) capital account C) official reserve transactions D) trade
When the short-run aggregate supply curve is steep, then for a given increase in aggregate demand: a. the increase in real GDP will be relatively small and the increase in the price level will be relatively large. b. the increase in real GDP will be relatively large and the increase in the price level will be relatively small. c. the increase in both real GDP and the price level will be large
d. the increase in both real GDP and the price level will be small. e. the decrease in real GDP will be larger than the decrease in the price level.
The President and the Congress jointly determine the nation's monetary policies, and the Fed is required by law to implement those policies
a. True b. False Indicate whether the statement is true or false