When government spending is completely crowded out, the economy must have
A) perfect capital mobility.
B) floating exchange rates.
C) both A and B.
D) broken the rules. Government spending cannot be completely crowded out.
C
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In the simple circular flow model, the funds received by a carmaker when it sells a car goes to
A) only the owners of the carmaker. B) the owners of all of the resources used to make the car. C) the workers who helped build the car. D) the owners of firms who sold materials to the carmaker, and the rest stays with the firm.
When the unemployment rate is greater than the natural unemployment rate, real GDP is
A) greater than full employment GDP. B) less than potential GDP. C) equal to potential GDP. D) greater than potential GDP. E) unrelated to potential GDP.
After researching the effectiveness of child safety seats in reducing the accident death rate of children ages one to four, economist Steven Levitt found that
A) for children under age four, safety seats are safer than any alternative. B) for children under age two, safety seats are safer than any alternative, but beyond age two, they provide no appreciable benefit over standard car seat belts. C) safety seats are actually more dangerous than standard car seat belts for children of any age. D) safety seats provide no appreciable benefit over standard car seat belts for children of any age.
A firm's investment expenditures are positively related to market interest rates
Indicate whether the statement is true or false