In the Keynesian model, an increase in government spending increases
A) the money supply by an equal amount.
B) the money supply by a multiple amount.
C) aggregate demand by an equal amount.
D) aggregate demand by a multiple amount.
D
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The federal government budget has generally been in a deficit for the past several decades because
A) budget deficits promote full employment. B) every year during those decades was a recession year in which expansionary fiscal policy was called for. C) military expenditures were increased steadily throughout those decades. D) political pressure on Congress to increase taxes and to balance the budget were less effective than political pressure to increase expenditures.
In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds
a. only if the asset is located at home. b. only if the asset is located abroad. c. whether the asset is located at home or abroad. d. None of the above is correct.