Q1. The crowding-out model implies that a: A) budget surplus will retard aggregate demand and trigger an economic downturn. B) budget deficit will increase the real interest rate and thereby retard private investment. C) budget deficit will stimulate aggregate demand and trigger a multiplier effect which will lead to inflation.
Q2. Are the following two statements about fiscal policy correct? Statement 1: The crowding out effect reduces the multiplier effect of expansionary fiscal policy but does not affect economic growth. Statement 2: A generational imbalance exists if the present value of government benefits to the current generation is not fully paid for by taxes on the current generation. Statement 1 Statement 2
A) Incorrect Incorrect B) Incorrect Correct C) Correct Correct
Q3. The federal government seeks ways to increase the total investment component of GDP. In response to the government’s objective, economist Sean Zadora recommends that the federal government lower taxes on interest earned on savings accounts. Zadora’s colleague, Timothy Smythe, recommends that the federal government reduce its budget deficit. Regarding their statements, Zadora and Smythe are: Zadora
Smythe
A) Correct Incorrect B) Correct Correct C) Incorrect Incorrect
Q4. Total investment is one of the components of a country’s GDP. Which of the following is least likely to be considered a source of funds for investment? A) National savings. B) Foreign borrowing. C) Household expenditures.
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发表于 2009-1-15 16:29
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