A concern about crowding out caused by increased government borrowing is that:
a. interest rates on private borrowing fall.
b. lower rates of economic growth can result from a decline in business investment spending.
c. the federal government may default on its loans.
d. foreign lenders find it less attractive to help finance federal deficits.
b
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The main redistribution effect of a tariff is the transfer of income from
A) domestic producers to domestic buyers. B) domestic buyers to domestic producers. C) domestic producers to domestic government. D) domestic government to domestic consumers. E) foreign producers to domestic consumers.
If initially the money supply is $2 trillion, velocity is 5, the price level is 2, and real GDP is $5 trillion, a fall in the money supply to $1 trillion
A) reduces real GDP to $2.5 trillion. B) causes velocity to rise to 10. C) decreases the price level to 1. D) decreases the price level to 1 and decreases velocity to 2.5.
If wages and prices are flexible and expectations are formed rationally, an increase in the money supply will cause
A) real wages to rise. B) real wages to fall. C) nominal wages to rise. D) nominal wages to fall.
When the U.S. government removes investment tax credits:
a. consumption spending falls. b. the return on investment increases. c. capacity utilization in the economy expands. d. the cost of capital increases. e. technological innovation advances more rapidly.