If a government finances an increase in its expenditures by selling bonds to the public, then the aggregate demand curve will:
A. shift out by the same amount regardless of whether crowding out occurs.
B. shift out more if crowding out occurs.
C. shift out - but not as much as it would if crowding out didn't occur.
D. not shift.
Answer: C
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If there is a basic surplus and a negative total deficit, then
A) interest cost > basic surplus. B) interest cost < basic surplus. C) interest cost > positive total deficit. D) interest cost < positive total deficit.
State the law of supply and explain it
What will be an ideal response?
Which of the following will cause the demand curve for a good to shift to the right?
a. a decrease in income b. an increase in the price of a complementary good c. a decrease in the price of the good d. an increase in the price of a substitute good e. an expectation that the price of the good will decline in the near future
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive). b. The real risk-free interest rate rises and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate rises and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.