"The crowding-out effect occurs when a government budget surplus reduces private savings." Is the previous statement true or false? Explain your answer
What will be an ideal response?
The statement is false. The crowding-out effect occurs when a government budget deficit reduces investment, not saving. Indeed, the crowding-out effect predicts that a government budget deficit results in a higher real interest rate, which increases the quantity of private savings.
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The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises,
A) the demand curve shifts rightward. B) the demand curve shifts leftward. C) there is a movement down along the demand curve to a larger quantity demanded. D) there is a movement up along the demand curve to a smaller quantity demanded. E) the demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded.
Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not. The club purchased the sets. Which method of allocation best describes the choice to purchase the sets?
A) force B) sharing equally C) command D) majority rule E) lottery
By acting as a lender of last resort during a banking panic, a central bank allows commercial banks to
A) encourage the public to borrow directly from the central bank, taking pressure of the banking system. B) satisfy customer withdrawal needs and eventually restore the public's faith in the banking system. C) call in their loans to their customers and eventually restore the public's faith in the banking system. D) make additional loans to increase the assets on their balance sheets.
The Bayes' theorem states that the conditional probability of event B given event A depends on the conditional probability of event A given event B and the independent probability of event B
Indicate whether the statement is true or false