Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?
A. The increased amount of public goods will crowd out privately produced goods.
B. The interest rate will decrease, leading to an increase in investment and capital formation.
C. A reduction in the growth of productivity, and a reduction in society's standard of living will occur.
D. Demand and supply of credit will increase.
Answer: B
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Exhibit 6-14 Cost curves
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In Exhibit 6-14, economies of scale only exist for output levels up to:
A. 1,000. B. 2,000. C. 3,000. D. 4,000.
If this firm produced at its most efficient output level it would produce _______ units.
A. 50
B. 80
C. 90
D. 100
An increase in government expenditures by $100 (unmatched by an increase in taxes) would, if the MPC = 0.90, result in an increase in real GDP by:
a. $1,000. b. $9,000. c. $900. d. $190. e. inadequate information is given.
Since 1970, the share of income in the
A. lowest quintile has increased and the share in highest has decreased. B. lowest quintile has decreased and the share in highest has increased. C. lowest quintile has increased and the share in highest has increased. D. lowest quintile has decreased and the share in highest has decreased.