Complete "crowding-out" describes the situation in the economy when
A) fiscal policy is effective in changing output.
B) the shift in the LM curve by monetary policy is "impotent."
C) the shift in the IS curve by fiscal policy is "impotent."
D) fiscal policy crowds out monetary policy.
C
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A mother of three who receives $600 a month in total welfare benefits if she is not working, but who loses all those benefits and also pays 10 percent of her earnings to the tax collector if she takes a job paying $1000 a month, is being taxed on her
earnings at an effective marginal rate of A) 10 percent. B) 30 percent. C) 50 percent. D) 70 percent.
GreenTree Corporation sells live Christmas trees. It observes that when it increases the price of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is:
A. perfectly elastic. B. elastic. C. inelastic. D. unit elastic.
A cartel is:
A. a group of fringe firms. B. a group of firms that collude to maximize group profits. C. legal in the United States as long as collusion is explicit. D. found in monopolistically competitive industries.
Suppose that real GDP is initially $100 trillion and the government attempts to increase real GDP to $101 trillion. The marginal propensity to consume is 0.75, and every $1.00 increase in real government spending crowds out $0.50 in real planned investment expenditures. How much increase in real government spending could lead to the desired level of real GDP?
A. $500 billion B. $0 C. $250 billion D. $100 trillion