Increases in the budget deficit are believed to cause reductions in investment. Based on your understanding of the IS-LM model, will a fiscal policy action that causes a reduction in the budget deficit cause an increase in investment? Explain
What will be an ideal response?
A policy that causes a reduction in the budget deficit will have an ambiguous effect on investment. Output will fall which will tend to depress I. However, the interest rate will also fall which will tend to increase I. I could increase, decrease, or remain unchanged.
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Entrepreneurship, as a factor of production, refers to
A) the technology used by firms. B) the human capital accumulated by workers. C) the value of the firm's stock. D) the human resource that organizes labor, land, and capital. E) the capital the firm uses.
The production function shows:
a. the total cost incurred to produce a certain level of output. b. the changes in cost incurred as output level varies. c. the relationship between inputs used and output produced. d. the impact of a change in production on the firm's revenues.