The crowding-out effect suggests that
a. expansionary fiscal policy causes inflation.
b. restrictive fiscal policy is an effective weapon against inflation.
c. a reduction in private spending that results from higher interest rates caused by a budget deficit will largely offset the expansionary effects of the deficit.
d. a tax reduction financed by borrowing will increase the disposable income of households and, thereby, lead to a strong expansion in aggregate demand, output, and employment.
C
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Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except:
A. longer life expectancies. B. higher rates of infant mortality. C. higher material standards of living. D. higher rates of literacy.
If an indifference map for a consumer is made up of straight, negatively sloped lines, the marginal rate of substitution ________ as more of the good on the horizontal axis is consumed
A) does not diminish B) diminishes C) increases D) More information is needed to answer the question.
Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. When trade opens up, the United States should produce:
A. both goods, since they have an absolute advantage in both goods, and not trade. B. only shoes, since they have a comparative advantage in the production of shoes, and not trade. C. apples, since they have a comparative advantage in the production of apples, and not trade. D. only apples, since they have a comparative advantage in the production of apples, and trade for shoes.
The time between implementation of a macro-policy change and when the change exerts its primary influence is called the
a. impact lag. b. recognition lag. c. administrative lag. d. tax reform lag.