Some economists believe that deficit spending can impose a burden on future generations. Which of the following does NOT explain the burden?
A. Investment will be crowded out by an increase in current consumption.
B. Future generations will have to be taxed at a higher rate.
C. Future generations will have a smaller capital stock that will reduce their wealth.
D. Deficit spending that is allocated to purchases leads to long-term increases in real GDP.
Answer: D
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Indicate whether the statement is true or false
The primary macroeconomic cost of unemployment is
a. higher prices b. lost leisure time c. lost output d. domestic violence e. mental illness (e.g., depression)
The "natural" rate of unemployment is the unemployment rate toward which the economy gravitates in the
a. short run, and the natural rate is constant over time. b. long run, and the natural rate is constant over time. c. short run, and the natural rate changes over time. d. long run, and the natural rate changes over time.
The function a decision maker seeks to maximize or minimize is the ________ function.
A. marginal B. decision-making C. optimal D. objective E. none of the above