A serious burden of a budget deficit and an increase in the national debt comes on the supply side because large budget deficits
A. discourage consumption and therefore lead to production cutbacks.
B. lead to lower interest rates and therefore to excessive optimism by consumers and businesspeople.
C. discourage investment and therefore may reduce the growth of the nation’s capital stock.
D. discourage foreign investment and therefore limit employment opportunities.
Answer: C
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In the long run, a perfectly competitive firm will
A) be able to make an economic profit. B) produce but incur an economic loss. C) make zero economic profit. D) not produce and will incur an economic loss equal to its total fixed cost. E) not produce but not incur an economic loss.
Refer to Table 14-8. If Brawny Juice selects a high price, what is Power Fuel's best strategy and what will Power Fuel earn as a result of this strategy?
A) Power Fuel will select a low price and earn $16 million. B) Power Fuel will select a low price and earn $8 million. C) Power Fuel will select a high price and earn $12 million. D) Power Fuel will select a high price and earn $16 million.
Unexpected inflation redistributes income:
a. away from workers with cost-of-living adjustments, benefiting employers. b. away from renters, benefiting landlords. c. away from poor people, benefiting the rich. d. away from people with fixed incomes, benefiting people with fixed costs. e. away from debtors, benefiting creditors.
Following a new deposit of $500, the loans of a commercial bank increase by $400. In this situation, the reserve ratio is most likely
A. 9 percent. B. 20 percent. C. 10 percent. D. 80 percent.