According to monetarists, an expansionary fiscal policy:
A. will be ineffective because the interest rate will rise and crowd out private investment
spending.
B. should not be permitted so long as a public debt exists.
C. should be used only when unemployment exceeds 6 percent of the labor force.
D. will be effective, provided the money supply is held constant.
A. will be ineffective because the interest rate will rise and crowd out private investment
spending
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Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
Prior-to-trade (autarky) producer surplus equals area(s)
A. J + I. B. E + F + J + I. C. E + F. D. J.
Resource use is efficient when
A) marginal social benefit exceeds marginal social cost. B) marginal social cost is decreasing. C) marginal social benefit equals marginal social cost. D) marginal social benefit is increasing.
OPEC has had a sustained effect on the price of oil since it was first founded in 1960
Indicate whether the statement is true or false
The phenomenon of crowding-out suggests that the positive impact of budget deficits on economic activity are reduced by ________
A) the impact produced by government spending on the environment B) an increase in national savings C) the interest rate effects associated with federal deficits D) the increase in pork barrel projects deficit spending entails