One reason government deficits do not cause complete crowding out is because:
a. There is an incentive for individuals in the household sector to adjust their investment portfolios to take advantage of the change in relative returns. This provides more funds to the real loanable funds market.
b. Consumption always picks up the slack, which is to say that consumption is the residual spending source when all else fails.
c. The amount of borrowing falls as the real risk-free interest rate rises.
d. All the above.
e. None of the above.
.A
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Fiscal policy affects
A. Interest rates only, and therefore does not affect the level or mix of output. B. Both the level and the mix of output. C. The level of output only. D. The mix of output only.
A shift in the demand curve means which of the following?
a) a change in demand at every price b) a rise in prices c) a decrease in both price and quantity demanded d) a change in consumer income
The federal government facilitated suburbanization by providing _______________ and ___________________.
Fill in the blank(s) with the appropriate word(s).
Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower