Overseas leakage occurs when net imports exceed net exports.
Answer the following statement true (T) or false (F)
False
Overseas leakage is caused when fiscal stimulus money is spent to purchase products made overseas.
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Explain the income effect and the substitution effect due to an increase in the wage rate
What will be an ideal response?
Assume that the government tries to reduce unemployment by increasing government spending. Which of the following unwelcome effects is not a side effect of this measure?
a. Lower overall (private plus government) borrowing in the real credit market b. Rising budget deficits. c. Increased real risk-free interest rate d. Higher inflation rates. e. Crowding out.
After 2012 when the U.S. economy recovered,
a. the budget deficits shrank, and the increases in the debt-to-GDP ratio became larger. b. the budget deficits grew, and the decreases in the debt-to-GDP ratio became larger. c. the budget deficit shrank, and the increases in the debt-to-GDP ratio became smaller. d. the budget deficits grew, and the decreases in the debt-to-GDP ratio became smaller.
The short-run aggregate supply curve in modern Keynesian analysis is
A. horizontal. B. upward sloping. C. vertical. D. downward sloping.