Based on the graph showing the crowding-out effect, the crowding-out effect ______ aggregate demand.
a. increases
b. decreases
c. eliminates
d. has no effect on
b. decreases
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A monopsonist that wants to hire more labor must pay more for the new labor than it is currently paying and increase the wage rate of all existing employees because
A) the demand curve for labor is inelastic. B) of labor unions. C) the supply of labor is upward sloping. D) of competition in the labor market.
Which of the following is a correct characterization of socialism?
a. Tradition answers the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Central planning is seldom used to answer the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.
If net taxes are cut, consumer
a. spending is not affected b. spending increases by the amount of the tax cut c. spending increases by an amount less than the full amount of the tax cut d. saving increases by the full amount of the tax cut e. spending increases by two-thirds of the amount of the tax cut and consumer saving increases by one-third of the amount of the tax cut
If, for a given disposable income level, the disposable income line lies above the consumption curve, saving:
A. equals consumption. B. is greater than zero. C. is less than zero. D. is equal to zero.