Ignoring the Ricardo-Barro effect, what impact does the government have in the loanable funds market?
What will be an ideal response?
The government has two effects in the market for loanable funds. First, if the government has a budget surplus, it adds to private saving and increases the supply of loanable funds. Second, if a government has a budget deficit, it increases the demand for loanable funds.
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Using the data in the above table, if potential GDP for this economy is $25 billion, then at the present moment real GDP is
A) less than potential GDP. B) equal to potential GDP. C) greater than potential GDP. D) at the full-employment level of output. E) not comparable to potential GDP.
An example of a price floor is
a. the regulation of gasoline prices in the U.S. in the 1970s. b. rent control. c. the minimum wage. d. any restriction on price that leads to a shortage.