If the economy is at full employment, then an increase in government spending:
A. would simply crowd out private spending.
B. would have too large an impact on real growth.
C. would cause deflation, which would increase unemployment.
D. is the right fiscal policy response.
Ans: A. would simply crowd out private spending.
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Dodd-Frank Act
What will be an ideal response?
An increase in the supply of bonds leads to
A) an increase in the price of bonds, a decrease in the interest rate, and an increase in aggregate demand. B) an increase in the price of bonds, an increase in the interest rate, and an increase in aggregate demand. C) a decrease in the price of bonds, an increase in the interest rate, and an increase in aggregate demand. D) a decrease in the price of bonds, an increase in the interest rate, and a decrease in aggregate demand.