An expansionary fiscal policy is likely to
A) decrease a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds.
B) increase a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds.
C) increase a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds.
D) decrease a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds.
Ans: A) decrease a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds.
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When income increases by 6 percent, the demand for potatoes decreases by 2 percent. The income elasticity of demand for potatoes equals
A) -2.00. B) 3.00. C) -3.00. D) 0.33. E) -0.33.
The potential output of an economy is: a. the output level at which inflation is very high
b. the output level at which nominal GDP is equal to real GDP. c. less than the full-employment rate of output. d. the output level at which total unemployment is zero. e. also referred to as the natural rate of output.