When deficits are run continuously, interest payments on the debt will become smaller relative to future deficits, ceteris paribus.
Indicate whether the statement is true or false.
Answer: False.
Explanation : A deficit commonly refers to the state of financial health whereby expenditures exceed revenue. When an increase in government expenditure or a decrease in government revenue increases the budget deficit , the treasury must issue more bonds. This reduces the price of bonds raising the interest. Individuals, businesses, and other governments purchase Treasury bonds and lend money to the government with the promise of future payment.
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One argument advanced in favor of not increasing the income tax on individuals with high income is that
A) increasing income tax increases wealth which contributes to increases in GDP. B) increasing the income tax on these individuals will reduce economic efficiency. C) not increasing income taxes will discourage corporations from increasing investment. D) increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes.
Log-linear demand function is also called a constant-elasticity demand function
Indicate whether the statement is true or false
The price elasticity of demand for labor will be smaller, the
A) smaller is the price elasticity of demand for the final product. B) easier it is to employ substitute inputs in production. C) larger is the proportion of wage costs in the total cost of production. D) longer is the time period under examination.
What happens to the price of the product and total revenue for a perfectly competitive firm if it doubles the amount of output it supplies in the market?
What will be an ideal response?