Suppose the government has a budget deficit of $2 billion. If there is no Ricardo-Barro effect, how much crowding out of investment occurs?
A) some crowding out occurs, but less than $2 billion
B) more than $2 billion
C) exactly equal to $2 billion dollars
D) No crowding out occurs and investment does not change.
E) No crowding out occurs because investment increases.
A
You might also like to view...
Some economists suggest the optimal way for a nation to protect its access to a strategic mineral is with
A) an infant industry tariff. B) a high rate of effective protection to keep local mines in business. C) a quota on imports of the mineral. D) a stockpile.
Refer to the four graphs above. Select the graph that best shows the changes in demand and supply in the market specified in the following situation: the market for corn, if gasoline producers use more ethanol from corn and good weather during the growing season yields a bumper harvest.
What will be an ideal response?