If planned investment does not fall when the interest rate rises, there will be
A) a slight crowding-out effect.
B) a substantial crowding-out effect.
C) no crowding-out effect.
D) a complete crowding-out effect.
Answer: C) no crowding-out effect.
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Briefly explain how reductions in government purchases and tax decreases would influence aggregate demand through the multiplier effect. Give an example.
What will be an ideal response?
Recall the Application about cultural factors in England and their relevance to the Industrial Revolution to answer the following question(s). According to the Application, the cultural changes in England allowed individuals to take advantage of:
A. new developments in science and technology. B. the increase in agrarian lifestyles. C. the decrease in population caused by the number of citizens who were leaving for the New World. D. the elimination of trade barriers resulting from the formation of the European Union.
The explicit cost of production is also called
A) accounting cost. B) overhead cost. C) direct cost. D) variable cost.
According to Say's law, there cannot be overproduction of goods and services because:
a. planned aggregate expenditures sometimes fall short of total output. b. prices and wages are "sticky" or inflexible in the downward direction. c. demand creates its own supply. d. supply creates its own demand.