According to the Keynesian view, if an economy was operating at long-run equilibrium, an increase in government expenditures (holding taxes constant) would
a. be inflationary.
b. lead to a recession.
c. lower the real rate of interest.
d. reduce the size of the national debt.
A
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Explain why only final goods are included in GDP
What will be an ideal response?
Economic growth depends on
A) low tax rates. B) high government spending. C) high rates of consumption. D) increases in the capital stock as a result of saving.
If you were a government official and wanted to raise the price of wheat, which of the following actions would you take?
a. Take wheat from government storage and sell it. b. Encourage farmers to use more fertilizer. c. Lower the price of rye. d. Subsidize purchases of farm equipment. e. Encourage farmers to grow less wheat.
A tax that reduces economic efficiency is always bad policy.
Answer the following statement true (T) or false (F)