According to Professor Baotai Wang who examined the crowding out phenomenon in Canada between 1961-2000, as discussed in the Case in Point, which of the following categories of government expenditures are most likely to lead to crowding out?
A) expenditures for health and education
B) expenditures for infrastructure and capital
C) expenditures for the protection of persons and property, including defense spending
D) expenditures for government and social services
Answer: B) expenditures for infrastructure and capital
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If the government implements a price ceiling on insulin, this will have all of the following effects on the market for insulin except
A) an increase in deadweight loss. B) a decrease in producer surplus. C) a more efficient equilibrium. D) a decrease in economic surplus.
The field of political economy:
A. examines the economic consequences of free markets. B. examines the economic consequences of public sector decision making. C. examines the economic consequences of private sector decision making. D. examines the labor market.
The real business cycle model best explains the procyclicality of the nominal money supply by
A) an unpredictable Federal Reserve. B) exogenous money. C) endogenous money. D) uncorrelated money.
The use of the same cost of capital (risk adjusted discount rate) for all capital projects in a corporation
A) is usually the correct procedure. B) is incorrect since different divisions of the corporation may be faced with different levels of risk. C) is incorrect since different capital projects, even in the same division, may be faced with different levels of risk. D) Both B and C