An increase in a budget deficit financed by borrowing can increase interest rates and reduce investment spending thereby creating lower rates of economic growth
a. True
b. False
Indicate whether the statement is true or false
True
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Sarah gets a salary increase of 20 percent. Before her raise, she purchased 5 pounds of hamburger and 1 pound of beef stew a month. After her raise, she consumes 2 pounds of hamburger and 3 pounds of beef stew a month. If everything else is held constant, we know that
A) hamburger is an inferior good and beef stew is a normal good for Sarah. B) hamburger is a normal good and beef stew is an inferior good for Sarah. C) both hamburger and beef stew are normal goods for Sarah. D) both hamburger and beef stew are inferior goods for Sarah.
Elena loves orange juice. She reads in the newspaper that 20 percent of the Florida orange crop was destroyed by a late spring frost. Economists predict that the price of oranges will rise by 50 percent by the end of the year. As a result, Elena's demand for orange juice
a. will increase but not until the end of the year. b. increases today. c. decreases as she looks for a substitute good. d. shifts left today.
Consider two restaurants located next door to each other: Quick Burger and The Sunshine Café. If Quick Burger opens a drive-through window, the increased traffic and noise will bother customers seated outside at The Sunshine Café. The table below shows the monthly payoffs to Quick Burger and The Sunshine Café when Quick Burger does and does not operate a drive-through window. Quick Burger Operates aDrive-Through WindowQuick Burger Does NotOperate Drive-Through WindowQuick Burger$24,000$15,000The Sunshine Café$11,000$23,000If Quick Burger has the legal right to operate a drive-through, and Quick Burger and The Sunshine Café can negotiate with each other at no cost, then will Quick Burger operate a drive-through window?
A. Yes, because Quick Burger's payoff is higher when it operates a drive-through. B. No, because it is not socially efficient to operate a drive-through. C. No, because it would lower the payoff for The Sunshine Café. D. It cannot be determined.
If the equilibrium price of widgets is $22, and then a price ceiling of $24 is imposed by the government, as a result,
a. there will be no effect on the widget market.
b. there will be a shortage of widgets
c. there will be a surplus of widgets.
d. the price of widgets will increase.