Whether crowding out occurs is most likely to depend on:

A. the timing of fiscal policy.
B. whether there is full employment in the economy.
C. the political business cycle.
D. whether the actions of state governments are procyclical.


Answer: B

Economics

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Which of the following is a fixed cost to farmer McDonald?

a. gasoline b. fertilizer c. insurance d. seed

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If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

A. products A and B are complementary. B. the cross elasticity of demand between these two products is positive. C. products A and B are substitutes. D. the demand for these products is inelastic.

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An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model,

A. the price level will increase, but real GDP will not change. B. the price level and real GDP will increase at the same time. C. the price level will increase, but real GDP will decrease. D. the price level will rise first, then real GDP will increase.

Economics

The Sweet Success Bakery sells 500 cakes at a price of $10 per cake. Its total economic costs for producing 500 cakes are $500. The Sweet Success Bakery's economic profits are

A. $100. B. $3,500. C. $4,500. D. indeterminate from this information.

Economics