When a government turns a deficit into a surplus we would expect
A) interest rates to rise.
B) interest rates to decrease.
C) the demand curve for loanable funds to shift rightward.
D) that more investment is crowded out.
B
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The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems
Indicate whether the statement is true or false
The Ricardian model of comparative advantage lends support to the argument that
A) trade tends to worsen the conditions of unskilled labor in rich countries. B) trade tends to worsen the conditions of owners of capital in rich countries. C) trade tends to worsen the conditions of workers in poor countries. D) trade tends to worsen the conditions of workers in rich countries. E) trade is mutually beneficial to the countries that engage in it.
When transactions costs are low, private actions to correct externalities are usually feasible
a. True b. False
The country of Glassen has experienced an expansionary gap for the last three years. The advocates of passive policy are likely to suggest a policy which causes _____. a. the short-run aggregate supply to shift to the left
b. the short-run aggregate supply to shift to the right. c. rising prices to shift the aggregate demand to the left. d. wages to fall relatively quickly. e. aggregate demand to shift to the right as wages increase.