If the government runs a budget deficit to fight a war and there is no Ricardo-Barro effect, what is an impact of the deficit?
A) The quantity of investment increases.
B) The real interest rate rises.
C) Firms purchase more capital equipment.
D) Animal spirits or irrational exuberance is created.
E) The quantity of private saving decreases.
B
You might also like to view...
A common definition of a recession is a period of time
A) of at least 6 months during which real GDP decreases. B) with an increase in real economic output from the previous period. C) with no change in real GDP. D) with no change in the dollar (money) value of economic output.
The Keynesian consumption function implies that at a given moment persons with high incomes are saving ________ persons with low incomes, a prediction which is ________ by actual cross-section consumption data
A) a lower fraction of income than, confirmed B) a lower fraction of income than, not confirmed C) a higher fraction of income than, confirmed D) a higher fraction of income than, not confirmed E) the same fraction of income as, confirmed
Which of the following is an example of an institution whose primary concern is global stability?
A) NAFTA (North American Free Trade Agreement) B) OPEC (Oil Producing and Exporting Countries) C) IMF (International Monetary Fund) D) Asian Development Bank
Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?
A. $3 B. $2 C. $1 D. unable to determine