In 2012, the U.S. federal government had a budget deficit. If there is no Ricardo-Barro effect, the budget deficit ________ the real interest rate and ________ the equilibrium quantity of investment
A) lowered; increased
B) raised; increased
C) lowered; decreased
D) raised; decreased
E) did not change; did not change
D
You might also like to view...
Economists frequently urge governments of developing countries to replace import quotas with import tariffs as a first step in a strategy that aims to reduce import protection
What is the reasoning offered by economists to support this recommendation to developing countries?
Economists argue that restrictions against ticket scalping actually drive up the cost of many tickets
a. True b. False Indicate whether the statement is true or false
Suppose the supply of dollars decreased from S2 to S1 in Figure 36.3. As a result of this change,
A. The Swiss franc will gain value worldwide. B. A trade deficit will be created in Switzerland. C. U.S. computer exports to Switzerland will be lower-priced in dollars. D. Swiss chocolate imports to the United States will be lower-priced in dollars.
Firms in perfect competition are price takers because
A) one firm determines the price that all other firms in the industry will charge. B) consumers have enough market power to set prices. C) firms accept the price determined by the government. D) each firm is too small relative to the market to be able to influence the price.