Author Question: In the figure above, if there is no Ricardo-Barro effect, the government has a budget ________ ... (Read 131 times)

Haya94 · **on:** Jun 29, 2018

In the figure above, if there is no Ricardo-Barro effect, the government has a budget ________ because the ________.

A) surplus of 0.2 trillion; SLF curve lies to the right of the PSLF curve.
B) deficit of 0.2 trillion; SLF curve lies to the right of the PSLF curve.
C) deficit of 0.4 trillion; SLF curve shows a smaller quantity of LF than the PSLF curve.
D) surplus of 0.4 trillion; SLF curve shows a larger quantity of LF than the PSLF curve.
E) surplus of -0.2 trillion; SLF curve lies to the right of the PSLF curve.

Question 2

If the economy is at full employment, then the inflation rate

A) is less than the expected inflation rate.
B) is equal to zero.
C) can be anywhere on a short-run Phillips curve.
D) is equal to the expected inflation rate.
E) exceeds the expected inflation rate.