In the context of sales taxation, SSTP stands for Simplified Sales Tax Project

Refer to the above figure. How do you describe what is happening as the economy moves from point A to point B?

A) The economy has acquired new resources that are well suited for producing wool. B) Land that was once used to grow wheat is now being used to graze sheep. C) The economy is producing more bread by choosing to produce less wool. D) The technology for growing wheat has improved.

If a federal budget deficit causes crowding out, _____

a. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because the marginal propensity to consume decreases b. real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment decreases c. interest rates fall, reducing the burden of the debt d. firms become more willing to invest e. interest rates fall, so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit