In the neoclassical growth model, if two countries are exactly the same but one has a lower permanent budget deficit, we would expect that country to have
a. higher output, a higher capital-to-labor ratio, and higher output growth in the steady state.
b. the same output and capital-to-labor ratio, but higher output growth in the steady state.
c. higher output, the same capital-to-labor ratio, and the same output growth in the steady state.
d. higher output, a higher capital-to-labor ratio, and the same output growth in the steady state.
D
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Refer to Figure 26-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) real GDP levels higher than what would occur if no policy had been pursued. B) inflation rates higher than what would occur if no policy had been pursued. C) potential real GDP levels lower than what would occur if no policy had been pursued. D) unemployment rates higher than what would occur if no policy had been pursued.
Which of the following is NOT a function of rental prices?
A) to stimulate the construction of new housing B) to ration the existing housing stock C) to provide housing to individuals below market value D) to allocate existing scarce housing among different people