Which of the following is NOT one of the ways a budget surplus can be used?
A) to allow private saving to fall without any need for a decline in total investment
B) to stimulate domestic investment
C) to reduce foreign investment
D) to increase the amount of borrowing from foreigners
D
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Ricardian equivalence argues that when the government cuts taxes and raises its deficit,
A) consumers anticipate that they will face lower taxes later to pay for the resulting government debt. B) consumers anticipate that they will higher services from the government. C) consumers anticipate that they will face higher taxes later to pay for the resulting government debt. D) consumers anticipate it will affect their future taxes, in general in the direction of lowering future taxes. E) consumers anticipate that the low tax rates will continue.
Those economists who attempt to explain why wages and prices do not freely adjust would most likely be
A) real business cycle theorists. B) new classical economists. C) new Keynesian economists. D) new growth theorists. E) none of the above