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.
c
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Rank the following goods from least to most elastic: high octane unleaded gasoline, unleaded gasoline, gasoline
A) High octane unleaded gasoline, unleaded gasoline, gasoline B) High octane unleaded gasoline, gasoline, unleaded gasoline C) Unleaded gasoline, high octane unleaded gasoline, gasoline D) Gasoline, unleaded gasoline, high octane unleaded gasoline E) None of the above.
The marginal product of capital is the increase in
A) capital needed to produce one more unit of output. B) output from a one-unit increase in capital. C) labor needed to accompany a one-unit increase in capital. D) output from a one-dollar increase in capital.
When the Federal Reserve buys Treasury bonds, it is called
A) a swap. B) an open market operation. C) a bond roll-over. D) bonding.
The smaller the reserve ratio the:
A. less a bank can loan out. B. smaller is the money multiplier. C. less money is created in the economy. D. greater the money is created in the economy.