If government spending does not change, an increase in the government deficit leads to
A) an increase in current consumption.
B) a decrease in current consumption.
C) no change in current consumption.
D) it depends on the marginal propensity to consume.
Question 2
We assume that the representative consumer's preferences exhibit the properties that
A) they evolve over time and that more is always preferred to less.
B) more is preferred to less and that the consumer prefers diversity.
C) the consumer likes diversity and that more is sometimes preferred to less.
D) more is sometimes preferred to less and that consumption and leisure are both normal goods.
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