The crowding-out effect of expansionary fiscal policy suggests that:
A. government spending increases at the expense of private investment.
B. imports replace domestic production.
C. private investment increases at the expense of government spending.
D. saving increases at the expense of investment.
A. government spending increases at the expense of private investment.
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An increase in the employment tax should have a relatively small effect on output if the labor supply curve
A) is perfectly horizontal. B) has a positive slope. C) is relatively flat. D) is relatively stee
Refer to Figure 4-1. Kendra's marginal benefit from consuming the second ice cream cone is
A) $6.50 B) $6.00 C) $3.00 D) $2.25
Suppose Hillary was offered the following choice: Option 1 is to win $10 for sure and Option 2 is to win $20,000 with odds of 1 in 2,000 and otherwise to win nothing. If Hillary is risk averse she
A. will choose Option 1. B. will choose Option 2. C. is indifferent between the two. D. will choose Option 1 or Option 2 with equal probability.
Refer to the graph shown. If this firm is maximizing profit, it will:
A. earn just normal profits, that is, zero economic profits. B. earn economic profits. C. make enough to cover its variable costs but not its fixed costs. D. incur a loss.