"Crowding out" is the theory that an increase in our federal government's budget deficit will likely:
a. increase the national debt.
b. increase interest rates.
c. decrease borrowing by households and businesses
d. reduce the impact of the spending multiplier implies because of crowding out.
e. all of these.
e
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In a free market there are significant restrictions on how a good or service can be produced or sold
Indicate whether the statement is true or false
In the rational expectations model
a. markets are perfectly competitive and in equilibrium. b. markets may not clear even if wages and prices are otherwise perfectly flexible. c. markets may temporarily be in disequilibrium. d. only anticipated changes in aggregate demand affect output.
If the Fed wishes to reduce inflation then it should
a. increase the discount rate. b. decrease reserve requirements. c. buy government securities on the open market. d. Do any of the above.
Refer to the diagram of the market for product X. Curve S t embodies all costs (including externalities) and D t embodies all benefits (including externalities) associated with the production and consumption of X. Assuming the market equilibrium output
is Q 1 , we can conclude that the existence of external:
A. costs has resulted in an overallocation of resources to X.
B. benefits has resulted in an overallocation of resources to X.
C. costs has resulted in an underallocation of resources to X.
D. benefits has resulted in an underallocation of resources to X.