The "crowding-out effect" suggests that
A. tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
B. increases in government spending financed through borrowing will increase the interest rate and reduce private investment.
C. it is very difficult to have excessive aggregate spending in our economy.
D. consumer and investment spending always vary inversely.
B. increases in government spending financed through borrowing will increase the interest rate and reduce private investment.
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Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales
The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. A's best strategy is to A) conduct R&D regardless of what B does. B) not conduct R&D regardless of what B does. C) conduct R&D only if B conducts R&D. D) conduct R&D only if B does not conduction R&D.
We define autonomous expenditure to be expenditure that:
A. depends on how much income changes in the economy. B. that changes under the guidance of the government. C. is unaffected by the current level of income in the economy. D. people make that pertains to the auto industry.
During 2007-2008, the price of gasoline increased from approximately $1.50 to $4.00 per gallon. As a result, the
What will be an ideal response?
The demand for U.S. dollars in the foreign exchange market is determined by all of the following except
A. American demand for American products. B. Europeans who would rather hold U.S. dollars than euros. C. Foreign demand for American investments. D. Foreign demand for American exports.