One reason government deficits do not cause complete crowding out is because:
a. Saving increases by the amount that consumption falls when income changes.
b. When the real risk-free interest rate rises, the real money supply rises due to changes in the public's preferred asset ratios (e.g., Cc/D, N/D, and U/D).
c. As the real risk-free interest rate rises, government spending automatically rises to pay for the higher interest expenses.
d. All the above.
e. None of the above.
.B
You might also like to view...
John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is ________
A) $2 B) $2.50 C) $3 D) $10
Bookstores often offer annual memberships that allow customers to purchase books at a 10% discount. Explain why this may increase profits of the bookstore
What will be an ideal response?