Complete crowding out implies that as government increases purchases by $1,
A) private spending decreases by $1.
B) Real GDP remains unchanged.
C) there is an equal offsetting decrease in one or more of the components of private expenditures.
D) all of the above
E) none of the above
D
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The portion of net exports determined by income in foreign countries is
A) induced net exports. B) autonomous net exports. C) total net exports. D) always equal to zero.
The above figure shows Larry's indifference map and budget lines for ham and pork. Which of the following statements is TRUE?
A) Pork is an inferior good. B) Ham is an inferior good. C) Neither pork nor ham is an inferior good. D) Both ham and pork are inferior goods.
An unanticipated shift to a more restrictive monetary policy by the Fed will
a. increase real interest rates and, thereby, reduce investment, current consumption, and aggregate demand. b. reduce real interest rates, leading to a depreciation of the dollar and an expansion in net exports and aggregate demand. c. increase real interest rates, leading to higher asset prices that will stimulate aggregate demand. d. reduce real interest rates and, thereby, stimulate investment, current consumption, and aggregate demand.
Which of the following will most likely occur during the contractionary phase of a business cycle?
a. Real GDP rises, and the unemployment rate falls. b. Real GDP declines, and the rate of inflation rises. c. The sales of most businesses decline, and the unemployment rate rises. d. Inflation rises, and employment/population ratio falls.