Ceteris paribus, a decrease in the government's budget deficit will increase domestic investment and net foreign investment.
Indicate whether the statement is true or false
Ques. 2Borrowing to pay for long-lived capital expenditures makes sense as
A) the benefits are received in the current year so the burden of paying for them should be spread over many years.
B) the benefits are received in the current year so the burden of paying for them should be paid in the current year.
C) the benefits are received over many years so the burden of paying for them should be spread over many years.
D) the benefits are received over many years so the burden of paying for them should be paid in the current year.
Ques. 3Ceteris paribus, an increase in the government's budget deficit will decrease the financial account surplus.
Indicate whether the statement is true or false
Ques. 4Some economists argue that the federal government should normally run a deficit at potential GDP, with the borrowed funds applied to
A) health care costs. B) social security benefits.
C) investment goods. D) consumption goods.
Ques. 5The nation of Hyperbole is in a recession, and the government decides to increase taxes and reduce government spending to reduce the growing deficit. This will ________ aggregate demand and will likely ________ real GDP and employment.
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase
Ques. 6Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________.
A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase
Ques. 7Ceteris paribus, an increase in the government budget deficit increases interest rates in the United States and causes a real appreciation of the dollar.
Indicate whether the statement is true or false
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