Does government borrowing crowd out private sector spending?
Crowding out refers to government deficit spending financed by borrowing that increases interest rates and thereby reduces private borrowing and spending. The crowding out effect probably exists, but to what extent is debatable. If deficit spending is used to increase our nation's production possibilities through public investment in infrastructure, then the crowding out effect is reduced. However, history shows that rarely is there a significant amount of any deficit allocated toward productive-enhancing public investment infrastructure. The extent of a crowding-out effect is important because any crowding out renders fiscal policy less effective in stimulating the economy during a recession.
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Suppose the U.S. GDP growth rate is faster relative to other countries' GDP growth rates. This will
A) shift the aggregate demand curve to the left. B) shift the aggregate demand curve to the right. C) move the economy up along a stationary aggregate demand curve. D) move the economy down along a stationary aggregate demand curve.
Describe the market structure of the beverage industry
What will be an ideal response?
Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?
a. Elephants live in Africa, whereas cows live in the United States. b. Elephants are a common resource. c. Cows are a common resource. d. Cows are a public good.
Which of the following result from a change in the money supply brought about by an open market purchase?
A) lower interest rate, higher exchange rate, decreased demand for investment and net exports B) higher interest rate, higher exchange rate, increased demand for investment and decreased demand for net exports C) lower interest rate, lower exchange rate, increased demand for investment and net exports D) higher interest rate, lower exchange rate, decreased demand for investment and increased demand for net exports