ECO 2013 Lecture Notes - Lecture 24: Household Debt, Aggregate Demand, Money Supply
Document Summary
Crowding out refers to the situation in which borrowing by the federal government raises interest rates and causes firms to invest less. Which of the following is most important for long-run growth and a healthy economy? a high rate of both savings and consumption. Higher standards of living are the result of an increase in the availability of goods and services that people value. Measured as a share of gdp, what happened to federal spending during 2001-2010? it increase more rapidly than during the 1990s. Proper timing of changes in discretionary fiscal policy is both crucially important and difficult to achieve. An increase in borrowing by the government will push interest rates upward, which will lead to a reduction in private spending. Which of the following is most likely to increase the incentive to invest, produce, and employ others? a reduction in tax rates. It fell during most of the 1990s, but rose sharply during 2001-2011.