Crowding out occurs when expansionary fiscal policy leads to
A) a higher money supply and a reduction in net exports.
B) a higher money supply and a reduction in the interest rate.
C) a higher interest rate and a reduction in private investment.
D) a higher price level and a reduction in the money supply.
Answer: C) a higher interest rate and a reduction in private investment.
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The Coase theorem is significant because it
A. implies that no transaction costs are associated with solving externalities. B. shows that property rights can be assigned. C. shows that under certain conditions externalities can be corrected in the market without resorting to nonmarket means. D. a and b
Refer to Figure 7-12 An increase in price from $30 to $35 would
a. increase total revenue by $250
b. decrease total revenue by $250.
c. increase total revenue by $500.
d. decrease total revenue by $500.
The measure of concentration in an industry that takes the sum of the squares of the market shares of each firm in the industry is called _______________.
Fill in the blank(s) with the appropriate word(s).
Which of the following would most likely be considered complements?
A) butter and margarine B) rental cars and taxis C) plastic wrap and aluminum foil D) tennis rackets and tennis balls