According to Ricardian Equivalence, crowding-out ________
A) is incomplete
B) will raise the level of domestic income
C) is complete
D) does not play a role in influencing private investment levels
D
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In the short run, if the price level rises, then the overall economy can temporarily produce beyond its nominal capacity. One reason for this is that
A) existing capital equipment can be used more intensively. B) the unemployment rate usually rises dramatically along with the price level. C) workers can be switched from counted to uncounted production. D) wage rates rise almost simultaneously with the price level.
In the simple Keynesian model, why does actual investment spending have to equal saving in the absence of the government and foreign sectors? Is this true only for the equilibrium? Explain
What will be an ideal response?
When calculating a firm's profit, an economist will subtract only
a. explicit costs from total revenue because these are the only costs that can be measured explicitly. b. implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured. c. the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm. d. the marginal cost because the cost of the next unit is the only relevant cost.
The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad. B. stabilizing the exchange rate against external shocks. C. stabilizing the interest rate against foreign capital outflows. D. promoting long term economic growth.