According to the traditional Keynesian analysis, if the government increases spending and pays for all of it by raising current taxes, then
A) a budget surplus will occur. B) aggregate demand will increase.
C) a budget deficit will occur. D) aggregate demand will decrease.
B
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Limit pricing in a contestable market sets the price at the highest level that ________
A) maximizes the profit of an entrant B) maximizes the profit of the existing firm C) maximizes the profit of both the existing firm and the entering firm D) inflicts a loss on an entrant
Assuming the central bank follows a money supply target, then an increase in the demand for money
a. will shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved. b. will shift the position of the LM schedule toward the predicted level as long as the target level of the money supply is achieved. c. may or may not shift the position of the LM schedule away from the predicted level even if the target level of the money supply is achieved. d. None of the above