Mercantilism was an economic policy that called for
a. the use of taxes and subsidies to control trade.
b. leaving economic decisions to the free market.
c. laissez faire.
d. the elimination of private property.
a. the use of taxes and subsidies to control trade.
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The crowding-out effect implies that:
a. increases in government purchases will lower interest rates and stimulate investment spending b. higher taxes reduce both consumption and saving. c. fiscal policy effects on interest rates will be offset by monetary policy. d. increases in government purchases increase income and the demand for loanable funds which will choke off some private spending.
Which of the following would shift long-run aggregate supply to the right?
a. increased immigration from abroad b. a decrease in the price of an imported natural resource c. opening the economy to international trade d. All of the above are correct.
The federal government began issuing inflation-indexed Treasury bonds in
A) 1913. B) 1989. C) 1997. D) 2001.
Suppose the government spends $10 billion subsidizing firms producing electricity with wind turbines because these firms are high cost producers. Will the subsidies lead to economic growth and higher income levels?
a. Yes, because more people will be employed by the firms producing electricity with wind turbines. b. No, the turbines are an inefficient form of producing electricity and therefore the subsidies will increase the opportunity cost of supplying it. c. Yes, because the government will be able to finance the subsidies without reducing private sector output. d. Uncertain, higher income levels will be achieved if the employment of the firms producing electricity with the wind turbines expands; if not, incomes will fall.