The New Classical View Argues That an Increase in Government

question 70

Multiple Choice

The new classical view argues that an increase in government debt will cause people to

• A)increase their current saving so they will be better able to pay the higher future taxes implied by the increase in the debt.
• B)increase their current consumption since the substitution of debt for taxes makes them wealthier.
• C)shift their savings to foreign banks where they will be more secure.
• D)do all of the above.

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Definitions:

Taxicab Medallions

License plates required for taxicabs that signify they are legally registered to operate; these medallions are often subject to municipal limitations and can be quite valuable.

Price Subsidy

A financial assistance given by the government to lower the price of a product or service to encourage its consumption or production.

Quantity Control

Regulatory measures or policies aimed at limiting the amount of goods produced, supplied, or available in a market.

Lower Limit

The smallest value that a given set, statistical sample, or data category can take on or be assigned.