Author Question: The government budget constraint tells us that the budget deficit is equal to A) interest on the ... (Read 73 times)

Mr3Hunna · **on:** Jun 30, 2018

The government budget constraint tells us that the budget deficit is equal to

A) interest on the debt.
B) the primary deficit.
C) the primary deficit plus interest on the debt.
D) imports minus exports.
E) the primary deficit plus the trade deficit plus interest on the debt.

Question 2

When the economy is in a liquidity trap, which of the following is not correct?

A) A reduction in the interest rate can be used to increase output.
B) Fiscal policy is more important.
C) Interest rate is zero.
D) Large increases in spending and cuts in taxes were not enough to avoid the recession.