The Congressional Budget Office reported that federal budget deficits in the United States were likely to increase during the next decade, and due to these higher deficits, "the nation's capital stock ultimately would be smaller, and productivity and
income would be lower than would be the case if the debt was smaller." This higher budget deficit would be represented graphically by
A) a shift in the supply curve for loanable funds to the right.
B) a shift in the supply curve for loanable funds to the left.
C) a movement to the right along the supply curve for loanable funds.
D) a movement to the left along the supply curve for loanable funds.
Answer: B
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When real GDP exceeds aggregate planned expenditure
A) an unplanned increase in inventories occurs. B) real GDP remains at its equilibrium. C) real GDP increases. D) firms increase production. E) an unplanned decrease in inventories occurs.
On the graph above, a possible cause of the rightward shift of the IS curve is an increase in ________
A) foreign demand for domestic goods B) taxes C) domestic demand for foreign goods D) the exchange rate E) none of the above