Which of the following is most important in increasing the rate of economic growth?
A. A highly progressive tax structure.
B. High interest rates on time deposits.
C. Increasing the percentage of GDP used for investment.
D. A constant supply of funds available to investors.
E.Reducing inequality of income and wealth.
Ans: C. Increasing the percentage of GDP used for investment.
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Which of the following countries experienced the sharpest fiscal contraction in order to gain admission to the Euro club?
A) Portugal B) Spain C) Italy D) France
Based on the conventional view of fiscal policy and potential GDP in the long run, explain what happens to each of the following if the government runs a budget deficit:
a. the supply of loanable funds to the private sector b. long-term real interest rates c. the capital stock d. the investment rate e. potential GDP