In 2012, the U.S. federal government had a budget deficit. If ...

[shenderson6]

In 2012, the U.S. federal government had a budget deficit. If there is no Ricardo-Barro effect, the budget deficit ________ the real interest rate and ________ the equilibrium quantity of investment.
 
  A) lowered; increased
  B) raised; increased
  C) lowered; decreased
  D) raised; decreased
  E) did not change; did not change

Question 2

Suppose an economy experiences a permanent increase in its natural unemployment rate. This change leads to
 
  A) a downward movement along the short-run Phillips curve.
  B) a leftward shift of the short-run Phillips curve.
  C) a rightward shift of the short-run Phillips curve.
  D) an upward movement along the short-run Phillips curve.
  E) no change in the short-run Phillips curve.

[morganmarie791]

Answer to Question 1

D

Answer to Question 2

C