What is the main argument which explains why an increased public deficit financed tax cut may not result in increased consumption?
A) People will increase savings to "finance" debt repayment by future generations.
B) People will increase consumption to "finance" debt repayment by future generations.
C) Savings is determined by uncertain events, the timing of future illnesses and death.
D) Savings is determined by certain events, the timing of future illnesses and death.
C
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Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied
a. True b. False Indicate whether the statement is true or false
Suppose that the demand for money increases as people anticipate upcoming economic problems. To offset this increase in money demand, the Fed should ________ the money supply, which would put ________ pressure on nominal interest rates.
A. increase; upward B. decrease; downward C. decrease; upward D. increase; downward