Under a balanced budget policy, a sharp decline in GDP will cause
A. no serious budget changes.
B. a tax cut or an increase in expenditures.
C. a tax increase or expenditure cut.
D. tax receipts to exceed government expenditures.
Answer: C
Economics
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The possibility that a borrower will break a promise made to the lender after the loan is made is one form of
A) the moral hazard problem. B) the adverse selection problem. C) outside collateral. D) inside collateral.
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If interest rates and output rises, then
a. government spending may have fallen. b. the money supply may have risen. c. taxes may have risen. d. expectations may have risen. e. none of the above.
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