Which of the following statements about crowding out is false?
A. It is not caused by a budget surplus.
B. It is caused by a budget deficit.
C. It can completely offset the government's debt
D. It affects interest rates and not economic growth.
Answer: D
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The table above shows techniques that can be used to produce 100 shirts. If the price of an hour of labor is $10 and the price of a unit of capital is $12, then the economically efficient technique is
A) W. B) X. C) Y. D) Z.
Suppose a sole proprietorship is earning total revenues of $100,000 and is incurring explicit costs of $75,000. If the owner could work for another company for $30,000 a year, we would conclude that:
A) the firm is incurring an economic loss. B) implicit costs are $25,000. C) the total economic costs are $100,000. D) the individual is earning an economic profit of $25,000.
When positive externalities exist in a market, if a Pigouvian subsidy is imposed:
A. those who interact in the market will lose surplus. B. those who interact in the market will gain surplus. C. those who do not interact in the market, but are affected by the externality, will gain surplus. D. None of these statements is necessarily true.
In 1991, the Federal Reserve lowered the reserve requirement from 12 percent to 10 percent. Other things the same this should have
a. increased both the money multiplier and the money supply. b. decreased both the money multiplier and the money supply. c. increased the money multiplier and decreased the money supply. d. decreased the money multiplier and increased the money supply.