An increase in our federal government's budget deficit will likely:
a. increase the national debt.
b. increase interest rates.
c. be less effective in stimulating the economy than the spending multiplier implies because of crowding out.
d. decrease borrowing by households and businesses.
e. All of the answers are correct.
e
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Suppose, as a result of various dynamic factors associated with exposure to international competition, Albania's economy grew, and is now represented by the rightmost production possibility frontier in the figure above
If its point of production with trade was point c, would you consider this growth to be export-biased or import biased? If Albania were a large country with respect to the world trade of A and B, how would this growth affect Albania's terms of trade? Its real income?
John Maynard Keynes's central proposition that a dollar increase in disposable income would increase consumption, but by less than the increase in disposable income, means the marginal propensity to consume (MPC) is:
a. greater than or equal to one. b. equal to one. c. less than one, but greater than zero. d. negative.
Schyler is able to take out a loan for $3,000 for one year at an annual interest rate of 10 percent. After calculating her return to be $200, Schyler will realize she will:
A. lose $100 overall if she takes out the loan. B. make $200 overall if she takes out the loan. C. make $100 overall if she takes out the loan. D. lose $200 overall if she takes out the loan.
Assuming the economy is experiencing a recessionary gap, classical economists predict that:
a. wages will remain fixed. b. lower wages will shift the short-run aggregate supply curve rightward. c. monetary policy should intervene. d. higher wages will shift the short-run aggregate supply curve leftward.