Assume that seigniorage and the government's primary deficit are both zero
If the real interest rate is less than the growth rate of real GDP, fiscal policy ________, and if the real interest rate is greater than the growth rate of real GDP, fiscal policy ________. A) is sustainable; may be sustainable
B) is unsustainable; is sustainable
C) is sustainable; is unsustainable
D) is unsustainable; may be sustainable
C
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Refer to Figure 26-8. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to
A) lower interest rates. B) raise interest rates. C) raise income taxes. D) lower income taxes.
Everything else held constant, if the expected return on RST stock declines from 12 to 9 percent and the expected return on XYZ stock declines from 8 to 7 percent, then the expected return of holding RST stock ________ relative to XYZ stock and
demand for XYZ stock ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls