What is meant by crowding out? Explain the difference between crowding out in the short run and in the long run
What will be an ideal response?
Crowding out refers to a decline in private expenditures — consumption, investment, and net exports — as a result of an increase in government purchases. In the short run, an increase in government purchases results in partial crowding out of private expenditures, but in the long run, a permanent increase in government purchases results in the complete crowding out of private expenditures.
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A decrease in liabilities will reduce a firm's accounting profit
Indicate whether the statement is true or false
Safe drivers buying "accident forgiveness" insurance tend to
a. Become even safer drivers b. Engage in more risky driving c. Engage in less risky driving d. Not change their driving patterns
In the short run, a perfectly competitive firm can make a profit, a loss, or go out of business
a. True b. False Indicate whether the statement is true or false
What role do losses play in a competitive price-searcher market?
a. They penalize a firm for producing a differentiated product. b. They signal that more resources are needed in a particular market. c. They show firms that barriers to entry are high. d. They send a message that more value would be created if the resources were used to produce other goods.