If the economy in the graph shown is currently at point B, and the government increases its spending, the likely outcome will be that the:
A. economy will increase its level of output.
B. economy will experience deflation.
C. economy's unemployment rate will increase.
D. All of these are likely to be true.
A. economy will increase its level of output.
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
According to the Keynesian view, as interest rates fall
a. people will hold more money b. people will hold less money c. people will increase interest-yielding asset holdings d. the quantity demanded of investment goods will fall e. the economy's aggregate demand will contract
The U.S. trade deficits of the 1980s and 1990s may represent a problem because they will require
A. higher consumption in the future in order to increase imports. B. lower consumption in the future in order to repay interest and principal to foreigners. C. lower consumption in the future in order to finance increased investment. D. higher budget deficits in the future in order to increase the trade surplus.
What are the reasons for preferring competition to monopoly?