According to the new classical view, budget deficits will
a. cause real interest rates to rise, which will decrease aggregate demand, output, and employment.
b. lead to an expansion in spending, which will stimulate both real output and employment.
c. fail to stimulate aggregate demand because people will save more in order to pay the higher future taxes implied by the expansion in government debt.
d. lead to inflation because the deficits expand the money supply.
C
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When technology increases the supply of a good and lower prices increase the quantity demanded,
A) the economy is reallocating resources to achieve an efficient allocation. B) consumer surplus falls. C) the invisible hand is unnecessary. D) the marginal benefit of the good increases with the quantity produced. E) the economy is no longer efficient because the quantity changes.
Refer to the data provided in Table 9.4 below to answer the question(s) that follow. Table 9.4qTFCTVCTCMCAVCATC0$100 $0$100 ---- -- 11004014040 40 140 21006016020 30 80 31009019030 30 63.334100124 224 343156 5100180 280 56 36 56 6100 264 364 84 44 60.677100 372 472 108 53.14 67.42Refer to Table 9.4. The market price is $84 and this firm is producing four units of output. Which of the following would you recommend to this firm?
A. Reduce price to $34, so that marginal cost will equal marginal revenue at 4 units of output. B. Increase output to seven units so that price is less than marginal cost. C. Increase output to six units, so that marginal cost equals marginal revenue. D. Continue producing four units of output, because the firm is able to make an economic profit.