In the long run, what effect does a government's deficit spending have on equilibrium real Gross Domestic Product (GDP)?
A. Higher government deficits will not raise equilibrium Gross Domestic Product (GDP) above the full-employment level.
B. Deficit spending will decrease the nation's equilibrium real Gross Domestic Product (GDP).
C. Equilibrium real Gross Domestic Product (GDP) will increase beyond the full-employment level and there will also be an inflationary effect.
D. The government's deficit spending will increase equilibrium real Gross Domestic Product (GDP).
Answer: A
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Autonomous expenditure is the component of
A) induced expenditure that changes when in real GDP changes. B) aggregate planned expenditure that changes only when government expenditure on goods and services change. C) aggregate expenditure that does not change when real GDP changes. D) aggregate expenditure that does not change when the interest rate changes. E) aggregate expenditure that changes when real GDP changes.
The problems of inflation are caused primarily by: a. greed on the part of sellers
b. uncertainty about inflation. c. too much incentive to lend money. d. greed on the part of union leaders. e. governments' actions to reduce the effects of inflation.
Which of the following statements about markets is true?
a. Markets reduce the opportunity costs of making exchanges. b. Markets expand the range of buyers and sellers available as counterparties. c. Markets increase the transaction costs of making exchanges. d. Markets increase the costs of information.
Capital structure refers to
A) the ratio of equity to debt. B) the ratio of common stock to preferred stock. C) the ratio of debt to equity. D) the ratio of cash to current liabilities