Crowding out may occur because ________ fiscal policy usually involves the government ________ money.
A. expansionary; lending
B. contractionary; borrowing
C. contractionary; lending
D. expansionary; borrowing
Answer: D
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Consider the straight-line demand curve illustrated in the figure above. At a price of $6, demand is
A) inelastic. B) elastic. C) unit elastic. D) More information is needed to determine if the demand is elastic, unit elastic, or inelastic.
Refer to Figure 16-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely
A) increase government spending. B) decrease government spending. C) increase oil prices. D) lower interest rates. E) increase taxes.
The duration of unemployment ________ during a recession.
A. decreases B. remains constant C. varies between 5 and 14 weeks D. increases
Answer the following questions true (T) or false (F)
1. In the circular flow model, households demand resources such as labor services in the product market. 2. In economics, the term "free market" refers to a market where no sales tax is imposed on products sold. 3. In a free market there are virtually no restrictions, or at best few restrictions, on how a good or service can be produced or sold.