What is the meaning of the term "crowding out"?
a. The exclusion of private investors in the foreign exchange market due to a central bank fixing of the exchange rate.
b. A lower consumption level because of high and accelerating inflation.
c. A reduction in private borrowing due to the government-induced increase in the real risk-free interest rate.
d. None of the above.
.C
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Other things being equal, an increase in consumption spending implies
A) a decline in saving. B) that economic growth will soon increase. C) a higher standard of living in the future. D) a decline in government spending.
A payment for the use of an input that exceeds the opportunity cost of the input is known as
A) real interest. B) economic profit. C) economic rent. D) economic cost.
Despite the monetary expansion of the 1992-2000 period, the inflation rate
a. rose due to adverse supply shocks. b. rose due to large increases in aggregate demand. c. fell despite adverse supply shocks. d. fell due to favorable supply shocks.
Which of the following contributed to the weak recovery from the 2008-2009 recession?
a. the restrictive monetary policy followed by the Fed b. constant policy changes that created uncertainty and thereby retarded private business investment c. sharp reductions in federal spending that were designed to achieve a balanced federal budget d. failure to run budget deficits that were large enough to exert an impact on aggregate demand