The new classical view of fiscal policy holds that
a. budget deficits will stimulate consumption.
b. budget deficits will decrease the saving rate.
c. individuals fail to recognize that debt-financing implies higher future taxes.
d. individuals fully anticipate the added tax liability implied by the debt financing and will increase their saving so they can meet this obligation.
D
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Refer to Figure 13-17. What is the amount of excess capacity?
A) Qj - Qh units B) Qj - Qf units C) Qh - Qg units D) Qh - Qf units
If the federal government runs a budget deficit, but the budget deficit as a percent of GDP is less than the growth rate of real output, the:
a. national debt will decrease as a share of GDP. b. national debt will remain a constant share of GDP. c. national debt will increase as a share of GDP. d. size of the national debt (in dollar value) will decline.
An increase in the marginal productivity of capital will lead to
a. an increase in current consumption. b. a rise in the interest rate. c. a decline in the demand for current consumption. d. a fall in the demand for capital.
The use of tax penalties to control pollution represents a
A. price-based market approach to the pollution problem. B. nonmarket approach to the pollution problem. C. major source of current federal revenues. D. pollution-rights solution to the pollution problem.