The Maastricht rules specified budgetary rules such as meeting deficit and debt targets because:
A) nations that are able to keep spending down will probably have more money left over to pay their Eurozone dues.
B) nations that are fiscally sound will not be tempted to inflate their currency to reduce the real burden of their debt.
C) if one nation spends more and taxes less, population will tend to emigrate to that nation.
D) the ECB is prohibited from lending to nations, that nation may run out of available credit.
Ans: B) nations that are fiscally sound will not be tempted to inflate their currency to reduce the real burden of their debt.
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What determines the level of output in the long-run classical model?
A. aggregate demand B. capital, labor, productivity C. interest rates D. prices
If the government purchases multiplier equals 2, and real GDP is $14 trillion with potential real GDP $14.5 trillion, then government purchases would need to increase by ________ to restore the economy to potential real GDP
A) $7.25 trillion B) $1 trillion C) $500 billion D) $250 billion