New classical economists stress that an increase in government expenditures financed by borrowing rather than taxes will
a. exert a strong expansionary impact on aggregate demand and real output.
b. affect the timing of taxes but not their magnitude.
c. lead to higher interest rates.
d. undermine confidence and reduce the level of private saving.
B
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Which of the following is the smallest portion of the market basket of goods that makes up the CPI?
A) food and beverages B) apparel C) transportation D) housing
That most used cars are sold by intermediaries (i.e., used car dealers) provides evidence that these intermediaries
A) have been afforded special government treatment, since used car dealers do not provide information that is valued by consumers of used cars. B) are able to prevent potential competitors from free-riding off the information that they provide. C) have failed to solve adverse selection problems in this market because "lemons" continue to be traded. D) have solved the moral hazard problem by providing valuable information to their customers.
As the price of DVD players has fallen over the last two years, more DVD players have been sold by consumer electronics firms. Is this a violation of the law of supply?
In the market for widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for widgets is 200 per month when there is no tax. Then a tax of $5 per widget is imposed. As a result, the government is able to raise $800 per month in tax revenue. We can conclude that the equilibrium
quantity of widgets has fallen by a. 40 per month. b. 50 per month. c. 75 per month. d. 100 per month.