If there are strong expectations of future economic growth, then the:
a. economy will move to the right along the existing consumption function.
b. economy will move to the left along the existing consumption function.
c. consumption function will shift downward.
d. consumption function will shift upward.
e. investment demand curve will shift upward.
Question 2
Critics of Keynesian fiscal policy argue that deficit spending will not stimulate the economy, because higher interest rates will discourage consumption and investment. This argument is known as the:
a. deficit-substitution effect.
b. multiplier effect.
c. burden-of-debt effect.
d. crowding-out effect.
Use strong leg muscles, keeping back straight, when lifting.
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economic question