How does the new classical theory of fiscal policy differ from crowding-out model?
Answer: Anticipation of higher future taxes will reduce private spending when government expenditures are financed by debt, whereas the crowding-out effect posits that this result occurs through higher interest rates.
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What is the difference between imports and exports?
What will be an ideal response?
Refer to Figure 9.1. Assume the economy is initially at point A
Following the initial change in short-run equilibrium resulting from a recession caused by an increase in oil prices, the end of the recession is best represented by which long-run equilibrium combination of price level and real GDP? A) P1; Y1 B) P3; Y3 C) P1; Y3 D) P3; Y1
An example of physical capital is: a. a $100 bill
b. a stock certificate. c. a chainsaw. d. a cheeseburger.
Which of the following is the best example of an automatic stabilizer?
a. a balanced federal budget b. the minimum wage c. unemployment compensation program d. discretionary fiscal policy