The crowding-out effect is
A. the tendency of contractionary fiscal policy to cause an increase in planned investment but a decrease in planned consumption in the private sector.
B. the tendency of expansionary fiscal policy to cause a decrease in planned investment or planned consumption in the private sector.
C. the tendency of expansionary fiscal policy to cause an increase in planned investment but not in planned consumption in the private sector.
D. the tendency of contractionary fiscal policy to cause an increase in planned investment or planned consumption in the private sector.
Answer: B
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Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?
A) Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. B) Supporters of protectionism believe that free trade will lead to inflation. C) The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. D) Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage.
If all firms had to bear all the social costs of their actions, we should observe marginal cost curves
A) of all firms shifting up. B) of some firms shifting up, of some others shifting down, and of the rest not shifting at all. C) of all firms that had generated externalities shifting up while there would be no change for the rest of the firms. D) of some firms shifting up and of the rest shifting down.
A demand curve that is horizontal indicates that the commodity
A) has few substitutes. B) must be very cheap. C) is a necessity. D) has a large number of substitutes.
Suppose in a country, the working-age population doubles due to immigration. However, the country neglects investment in research and development and hence the country's level of technology is stagnant
Which of the following statements will be true of this economy? A) The economy will experience steady economic growth. B) The savings rate will remain stagnant over the years. C) The economy's output will rise at an increasing rate over time. D) The economy cannot achieve a sustained growth.