Which of the following statements about the effects of an increase in government purchases is most accurate?
a. In the classical model, it will cause complete crowding out. In the short-run macro model, crowding out will be incomplete.
b. In the classical model, it will cause incomplete crowding out. In the short-run macro model, crowding out will be complete.
c. Crowding out will be complete in both the classical and short-run macro model.
d. Crowding out will be incomplete in both the classical and short-run macro model.
e. In the classical model, the increase in government spending will lead to a decrease in investment spending and autonomous consumption. In the short-run macro model, it will not.
A
You might also like to view...
Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the economic profit generated by Extreme Gaming in the first year?
A. $160,000 B. $280,000 C. $220,000 D. $155,000
The above figure shows the marginal private cost curve, marginal social cost curve, and marginal social benefit curve for raising goats on a common pasture. The efficient outcome is raising ________
A) 0 goats B) 40 goats C) 50 goats D) 55 goats
In deciding whether to invest in excess capacity in order to deter entry, incumbents should consider all of the following except
a. the order of play in pricing and capacity choice decisions b. the customer sorting pattern c. the sunk cost required to achieve excess capacity d. the joint-profit-maximizing cartel output e. the potential entrant's projected profitability
The government wants to improve the irrigation system for farmers by setting up wells. The farmers, in return, would have to pay a sum of $100 each. Many farmers are aware that even if they do not pay, other farmers will pay for it and the required sum of money would easily be collected. This problem can be avoided by: a. taking the help of the law
b. forming an association and putting social pressure to make sure all the farmers pay. c. imposing an extra tax on the farmers who do not pay for the irrigation system. d. preventing all the farmers from using the well.