Some economists believe that financing deficit spending by increasing taxes will lead to a lower level of national consumption and a higher level of national savings than deficit spending. The reason is
A) that people do not realize that taxes have increased also.
B) the interest rate on the debt will increase.
C) people will forgo private consumption now as society substitutes government goods for private goods.
D) people believe that they can consume the government provided goods and have future generations pay the bill.
C
You might also like to view...
If GDP grew 3% in 1970, 2.2% in 1971 and 2.5% in 1972 then, what is the average annual growth rate over this period?
A) 5% B) 4% C) 2.6% D) -2.2%
Assume Congress enacts a $10 billion increase in spending and a $10 billion tax increase to finance the additional government spending. The result of this balanced-budget approach is a:
a. $20 billion increase in aggregate demand. b. $10 billion increase in aggregate demand. c. $100 billion increase in aggregate demand. d. $10 billion decrease in aggregate demand.