Suppose an Economist Is Analyzing the Impact of a Budget

question 4

Multiple Choice

Suppose an economist is analyzing the impact of a budget deficit used to finance a significant infrastructure project that will pay significant dividends in the coming years. That economist will focus on

• A)strictly the amount borrowed.
• B)strictly the inflation adjusted amount borrowed.
• C)strictly the ratio of the deficit to GDP
• D)both the ratio of the deficit to GDP and whether what is purchased with the borrowed money will produce enough gains to be worth that borrowed.

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Definitions:

Conspiracy

Conspiracy is an agreement between two or more persons to commit an illegal act or to accomplish a legal end through illegal means.

Price-fixing Conspiracy

An illegal agreement between competing businesses to fix prices at a certain level, restricting competition and violating antitrust laws.

Parallel Pricing

A situation where competitors in the market set their prices at a similar level without explicit agreement, often as an anti-competitive practice.

Minimum Price

A stipulated or regulated lowest price that can be charged for goods or services.