Multiple Choice
In the new classical model, a $100 billion increase in government purchases financed by borrowing will
A) increase the real interest rate, which will crowd out private spending.
B) lead to a $100 billion increase in real GDP.
C) lead to a $400 billion increase in real GDP if the marginal propensity to consume is three-fourths.
D) leave the interest rate, aggregate demand, and real output unchanged.
Correct Answer:
Verified
Correct Answer:
Verified
Q49: A substantial decrease in marginal tax rates
Q50: If the government ran a major budget
Q51: Politicians often instruct households to spend in
Q52: When the government levies taxes to subsidize
Q53: Supply-side economics stresses that<br>A) aggregate demand is
Q55: Which of the following is part of
Q56: The crowding-out effect implies that a<br>A) budget
Q57: The crowding-out effect refers to the possibility
Q58: Since the mid-1980s, the debt-to-income ratio of
Q59: Which of the following is the strongest