A consensus estimate based on a number of studies suggests that if there is an increase in budget deficits (or a fall in budget surplus) by 1% of GDP, it will most likely cause which of the following?
A. an increase of 0.5–1.0% in the long-term interest rate
B. long and variable time lags in enacting the fiscal policy
C. smaller impact due to temporary fiscal policy
D. output above the potential GDP output level
Answer:A
A consensus estimate based on a number of studies suggests that if there is an increase in budget deficits (or a fall in budget surplus) by 1% of GDP, it will most likely cause which of the following?
A. an increase of 0.5–1.0% in the long-term interest rate B. long and variable time lags in enacting the fiscal policy C. smaller impact due to temporary fiscal policy D. output above the potential GDP output level
Explanation: Type: Multiple Choice