A concern about crowding out caused by increased government borrowing is that:
A. interest rates on private borrowing fall.
B. lower rates of economic growth can result from a decline in business investment spending.
C. the federal government may default on its loans.
D. foreign lenders find it less attractive to help finance federal deficits.
Answer: B
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A political candidate promises voters more funding for AIDS research and child care and assures them they will not have to sacrifice any other goods or services to obtain the additional programs.
A. This may be possible if the economy has unemployed resources. B. This is possible only in a fully employed economy. C. This is possible if the economy is producing on its production possibilities curve. D. None of the choices are possible.
As wealth increases in the economy, savers are willing to
A) hold more cash relative to their holdings of bonds. B) buy fewer bonds at any given price. C) lend more at any given interest rate. D) lend less at any given interest rate.
The demand for labor curve depicts the inverse relationship between the wage rate and the revenue generated by each unit of labor
a. True b. False Indicate whether the statement is true or false
Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference?
a. Harold must enjoy ironing more than Sarah does. b. Harold must be better at ironing than Sarah is. c. The opportunity cost of ironing is greater for Harold. d. Sarah has a higher opportunity cost of laundering her clothes than Harold does.