The crowding-out effect from government borrowing to finance the public debt is reduced when:
A. The economy is experiencing a period of high inflation
B. The economy is operating at the full-employment level of output
C. Public investment complements private investment
D. Public investment substitutes for private investment
C. Public investment complements private investment
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Scarcity is only a temporary problem that a society can solve by promoting economic growth.
Answer the following statement true (T) or false (F)
The law of diminishing marginal returns results in average total cost eventually
A. decreasing at an increasing rate. B. increasing at an increasing rate. C. increasing at a decreasing rate D. decreasing at a decreasing rate.
It is generally claimed that a movement from autarky to free trade consistent with Ricardian comparative advantage increases the economic welfare of each of the trade partners
However, it may be demonstrated that under certain circumstances, not everyone in each country is made better off. Illustrate such a case.
The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that
A) high rates of protection tend to harm economic growth. B) the poorer is the country the easier it is for it to "catch up" economically. C) low rates of protection tend to promote economic growth. D) free trade always best stimulates a developing country's economy. E) neither trade liberalization nor import substitution is a foolproof strategy for economic development.