Using the Keynesian model, the effect of a decrease in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the long run
A) an increase; no change
B) a decrease; no change
C) an increase; an increase
D) no change; a decrease
A
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A failure of the pricing system has led to pollution
a. True b. False Indicate whether the statement is true or false
If the U.S. government runs a budget deficit (G? T), that deficit must be financed by an excess of
A. T over G. B. C over T plus G. C. investment by American businesses and individuals. D. S over I by American businesses and individuals, or by borrowing from foreigners.
The financial sector channels savings back into the spending stream.
Answer the following statement true (T) or false (F)
In actual practice, does the Fed monetize the debt?
A. No, it did not do so even with large deficits in the 1980s and early 2000s. B. No longer, although it monetized much of the deficit in the 1980s. C. Yes, although it monetizes less now than in the 1980s. D. Yes, it has monetized the deficit steadily since the early 1970s.