The term crowding-out effect refers to
a. the reduction in aggregate supply that results when a monetary expansion causes the interest rate to decrease.
b. the reduction in aggregate demand that results when a monetary expansion causes the interest rate to decrease.
c. the reduction in aggregate demand that results when a fiscal expansion causes the interest rate to increase.
d. the reduction in aggregate demand that results when a decrease in government spending or an increase in taxes causes the interest rate to increase.
c
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When China builds a dam using few machines and a great deal of labor, it is answering the ________ part of one of the two big economic questions
A) "what" B) "how" C) "where" D) "for whom"
New classical economists
a. accept the monetarist notion that markets are perfectly competitive except for a lack of perfect information. b. do accept the difference between the short-run and long-run results in the monetarist analysis of the effects of aggregate demand on output and employment. c. accept the difference between the short-run and long- run results in the Keynesian analysis of the effects of aggregate demand on output and employment, but not in the monetarist analysis. d. accept the difference between the short-run and long-run results in the monetarist analysis of the effects of aggregate demand on output and employment, but not in the Keynesian analysis. e. Both a and b
According to the new classical school, if macroeconomic policy is perfectly predictable, then the aggregate supply curve and the Phillips curve must be vertical in both the short run and the long run
a. True b. False Indicate whether the statement is true or false
A reason why the CPI overstates the cost of living is that the
A. BLS audits prices in the same types of stores, rather than shift to cheaper outlets. B. CPI makes no attempt to ascertain what average people buy. C. CPI makes no attempt to update the market basket. D. CPI only measures the effects of inflation on the poor.