One reason government deficits do not cause complete crowding out is because:
a. Saving increases by the amount that consumption falls when income changes.
b. When the real risk-free interest rate rises, the real money supply rises due to changes in the public's preferred asset ratios (e.g., Cc/D, N/D, and U/D).
c. As the real risk-free interest rate rises, government spending automatically rises to pay for the higher interest expenses.
d. All the above.
e. None of the above.
.B
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Assume that the full-employment level of output is $1,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,100 and at the price level of 100 current aggregate demand is $1,200. If the government moves the economy back to the full-employment level of output by increasing taxes by $50, then the expenditures multiplier equals
A. 2. B. 10. C. 5. D. 4.
Why is money as a medium of exchange important in an economy?
What will be an ideal response?
The total labor force consists of: a. the entire population
b. the population over the age of sixteen. c. the number of officially employed persons. d. the number of officially employed persons plus the number of officially unemployed persons.
At the current price of a good, Jessica's consumer surplus equals 12, Lauren's consumer surplus equals 14, and Isabel's consumer surplus is 4. By perfect discrimination, a monopolist could increase his profit by
A) 4. B) 12. C) 16. D) 30.