If there is initially a federal budget deficit, and taxes fall while transfer payments rise:
a. there is an indeterminate effect on both AD and the budget deficit.
b. AD increases and the budget deficit increases

If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts leftward, the equilibrium

A) price of bottled water definitely increases. B) price of bottled water definitely decreases. C) quantity of bottled water definitely increases. D) quantity of bottled water definitely decreases.

The infant industry argument calls for active government involvement

A) only if the government forecasts are accurate. B) only if some market failure can be identified. C) only if the industry is not one already dominated by industrial countries. D) only if the industry has a high value added. E) only if the industry is independently able to earn high returns.