Answer the following questions true (T) or false (F)
1. Long lags associated with the legislative process in implementing fiscal policy make it more difficult to use than monetary policy.
2. The budget deficit increases during wars and recessions.
3. Increasing the federal budget deficit will contribute to increasing the federal government debt.
1. TRUE
2. TRUE
3. TRUE
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The long-run aggregate supply curve shows the
A) maximum GDP the nation will ever produce. B) full-employment level of real GDP. C) level of real GDP associated with a constant price level. D) level of output at which real GDP equals nominal GDP.
Suppose the U.S. Congress is successful in enacting tariffs large enough to eliminate the current account deficit. What would happen to the level of domestic investment?
A) It would rise and exceed national saving. B) It would fall to a level equal to national saving. C) It would not change. D) It would rise to a level equal to net foreign investment.