Lately, the ratio of debt to GDP has been
A. rising at a small rate.
B. rising steadily.
C. falling modestly.
D. staying constant.
Answer: B
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When the crowding-out effect of an increase in government purchases is included in the analysis:
a. AD shifts left, but by more than the simple multiplier analysis would imply. b. AD shifts left, but by less than the simple multiplier analysis would imply. c. AD shifts right, but by more than the simple multiplier analysis would imply. d. AD shifts right, but by less than the simple multiplier analysis would imply.
When a bank makes a loan by crediting the borrower's checking account balance with an amount equal to the loan:
A. money is created. B. the bank immediately loses reserves. C. the bank gains new reserves. D. the Fed has made an open-market purchase.
Suppose the government cuts taxes by $300 million dollars this year and must pay off its debt next year by increasing taxes by $300 million
According to Ricardian equivalence, consumption spending will ________ this year and ________ next year, all else equal. A) increase by $300 million; decrease by $300 million B) increase by $150 million; decrease by $150 million C) increase by $300 million; not change D) not change; not change
In the Keynesian model, a decrease in real autonomous spending results in a more than proportional decrease in real Gross Domestic Product (GDP) because
A) consumption decreases as a result of lower real disposable income. B) consumption increases while real disposable income decreases. C) real autonomous spending decreases further as real disposable income decreases. D) government spending also decreases.