Question

The response of investment spending to an increase in the government budget deficit is called

Select one:
a. crowding out.
b. income minus net taxes.
c. private dissaving.
d. expansionary investment.

How will an increase in the government budget surplus as a result of lower government spending (with no change in net taxes) affect private saving in the economy?

Select one:
a. Private saving will decrease by less than the amount of increase in the budget surplus.
b. Private saving will be unaffected by the increase in the budget surplus.
c. Private saving will increase by the amount of increase in the budget surplus.
d. Private saving will decrease by the amount of increase in the budget surplus.

Which of the following would encourage economic growth through increases in the capital stock?

Select one:
a. an increase in household saving
b. a decrease in the government deficit
c. a change from an income tax to a consumption tax
d. All of these

If net taxes fall by $80 billion, we would expect

Select one:
a. household saving to rise by less than $80 billion.
b. household saving to rise by $80 billion.
c. household saving to fall by more than $80 billion.
d. the government deficit to fall by $80 billion.

Answer 1

Ans

1) when government spend more money on purposes of investment then deficit increase so that is crowding out effect.

A) crowding out

2) in the balance of payment we can show surplus of government at lower spending when Private saving will decrease by less than the amount of increase in the budget surplus.

A) Private saving will decrease by less than the amount of increase in the budget surplus.

3) in the above MCQ all the of the option show healthy economic growth.

D) all the above

4) when tax rate decrease peoples disposable income increase at that time consumption amount increase as the effect on same saving is decrease. Means Household savings decrease by $80 Billion's.

A) household saving to rise by less than $80 billion.