The "crowding out" effect states that government spending pushes up interest rates and reduces private investment spending
a. True
b. False
Indicate whether the statement is true or false
True
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The deflation of the 1930s impacted the U.S. economy because it led some consumers to ________ and because it ________
A) demand higher wages in anticipation of prices eventually rising again; increased manufacturing since firms could afford to hire more labor B) increase purchases to take advantage of the falling prices; increased the burden on lenders C) postpone purchases while they waited for prices to fall even lower; increased the burden on borrowers D) borrow more money since money was now cheap; reduced the amount of money consumers would have to pay back on their outstanding loans
In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in
the welfare of the fixed factor in the production of cloth. A) an ambiguous change; a decrease; an increase B) an ambiguous change; an ambiguous change; an ambiguous change C) a decrease; an ambiguous change; an ambiguous change D) an increase; a decrease; an increase E) an ambiguous change; an increase; a decrease
Country A and country B are the same except country A currently has more capital. Assuming diminishing returns, if both countries increase their capital by 100 units and other factors that determine output are unchanged, then
a. output in country A increases by more than in country B. b. output in country A increases by the same amount as in country B. c. output in country A increases by less than in country B. d. None of the above is necessarily correct.
When the value of our goods exports is less than the value of our goods imports,
A. foreign currency reserves must fall. B. the value of the dollar must fall. C. there will be domestic unemployment. D. there will be an unfavorable balance of trade.