Author Question: Other things being equal, during a period when the federal government issues more Treasury ... (Read 31 times)

DelorasTo · **on:** Jun 29, 2018

Other things being equal, during a period when the federal government issues more Treasury securities to borrow funds

A) the flow of government expenditures during that period must exceed the flow of tax revenues.
B) the flow of government expenditures during that period must exceed the stock of tax collections.
C) the stock of government deficit spending during that period must exceed the flow of tax revenues.
D) the stock of government deficit spending during that period must exceed the stock of tax collections.

Question 2

Suppose an economy originally in long-run equilibrium experiences a decrease in aggregate demand. According to the classical model

A) real Gross Domestic Product (GDP) will not change but the price level will fall.
B) real Gross Domestic Product (GDP) will fall, and then the price level will fall also.
C) the price level will not change but real Gross Domestic Product (GDP) will fall.
D) real Gross Domestic Product (GDP) will fall, wages will fall, but the prices of goods and services will stay the same.