Unformatted text preview: b) higher interest rate cause higher budget deficit c) higher budget deficit causes higher interest rate d) we do not know the causality between interest rate and budget deficit Answer: c) 3. A sudden discovery of gold mine would increase the capital of the country by 10%. What would happen? a) a higher interest rate. b) a lower wage rate. c) the share of labor in the total output would decrease. d) the share of the labor in the total output would remain the same. Answer: d)...
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- Spring '08