LOANABLE FUNDS Based on this model, the budget deficit leads to in the level of investment and in the interest rate. Which of the following arguments might an advocate of a balanced budget make in support of his position? Check all that apply. Budget deficits decrease national saving. Budget deficits place a burden on future taxpayers. Budget deficits crowd out private investment. Budget deficits increase national saving. Proponents of a balanced budget argue that the government's budget deficit cannot grow forever, but critics believe that this is not necessarily the case. They argue that what matters is the size of the debt relative to the nation's income. For example, suppose that real output in the United States grows at approximately 3%. If the inflation rate is 2% per year, this means that nominal income must be growing at a rate of % per year. Because nominal income grows over time, the nation's ability to pay back the national debt also rises. Therefore, as long as the nation's income grows than the government debt, the level of debt can continue to increase without harming the economy. In this case, the nominal government debt can rise by % each year without increasing the debt-to-income ratio.

Question 21 An increase in real per capita GDP in an economy would __________ the average standard of living and would _________ life expectancy.   raise; have little effect on   raise; shorten   raise; increase   have no effect on; increase   lower; shorten       Question 22   An increase in _________ would lead to an increase in long-run economic growth.   consumer spending and borrowing   government taxes and fees   resources and technology   imports and exports   prices and interest rates     Question 23   Which of the following are the three major categories of resources?   physical capital, technology, institutions   land, labor, technology   institutions, human capital, land   natural resources, physical capital, human capital   labor, physical capital, technology

In the long-run framework, budget surpluses: Choose the Correct and Explain why its correct should be run whenever output dips below potential output. should never be run since they crowd out investment in the short run. are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment. should be run on a permanent basis since they boost saving and investment and stimulate economic growth.

Explanation it correctly