According to the crowding-out effect, expansionary fiscal policy will lead to
a. higher interest rates, an appreciated dollar, and reduced net exports.
b. higher interest rates, an appreciated dollar, and increased net exports.
c. reduced interest rates, an appreciated dollar, and reduced net exports.
d. reduced interest rates, an appreciated dollar, and increased net exports.
A
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When there is a capacity constraint
A) firms face sunk costs when deciding whether or not to expand. B) consumers will avoid the producer and go with a firm that has extra capacity. C) firms are not maximizing their profits during high season. D) firms can use peak-load pricing to increase profits during periods of high demand.
If the economy is self-regulating and in a recessionary gap,
A) wages and prices will fall. B) wages will fall, but prices will rise. C) neither wages nor prices will change. D) wages will rise, but prices will fall. E) wages and prices will rise.
Henry Ford’s use of mass-production techniques to produce cars faster and cheaper illustrates how ______.
a. production innovations can create economies of scale b. problems set in when manufacturing increases quickly c. assembly lines removed the need for a large workforce d. an increasing output level raises the average total cost
The optimal efficiency wage requires
A. firms to pay any wage above the competitive wage. B. firms to pay the competitive wage. C. firms to pay fringe benefits. D. the total product curve to be downward sloping. E. firms to pay the unique wage above the competitive wage such that the elasticity of output with respect to wages equals one.