In the extreme case of a complete crowding-out effect
A. an increase in government spending will stimulate investment spending.
B. an increase in tax rates will stimulate work effort.
C. an increase in government spending will not increase aggregate demand.
D. an increase in interest rates will stimulate investment spending.
Answer: C
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When tax revenues minus outlays is i. positive, the government has a budget surplus. ii. negative, the government has a budget deficit. iii. zero, the government has a balanced budget
A) i, ii, and iii B) i and ii only C) ii and iii only D) i only E) iii only
If a firm in a competitive industry is making no profit but still producing, it must be the case that
a. MC = MR > ATC b. MC = MR < ATC c. MC = ATC > MR d. MC = MR = ATC e. this situation is not possible
People are likely to want to hold more money if the interest rate
a. increases making the opportunity cost of holding money rise. b. increases making the opportunity cost of holding money fall. c. decreases making the opportunity cost of holding money rise. d. decreases making the opportunity cost of holding money fall.
What are the two types of demand that make up total demand for money?
What will be an ideal response?