In practice, increases in government spending in an open economy can crowd out
A) net exports. B) consumption. C) investment. D) all of the above
D
You might also like to view...
Assuming all else equal, the credit supply curve shows the relationship between the quantity of credit supplied and the:
A) real wage rate. B) real interest rate. C) income tax rate. D) inflation rate.
Markets allocate resources efficiently when Adam Smith's "invisible hand" is allowed to work freely. Which of the following statements is true?
a. Unrestrained, competitive markets can accomplish optimal resource allocation through the invisible hand - the competitive price system. b. Mandatory controls that lower prices below equilibrium improve economic welfare by making the product cheaper and promote the efficient use of resources. c. The "visible hand" of government planners provides transparency to markets and thus improves outcomes. d. Increased competition from medical travel, domestic or international, does harm to patients who do not have the ability to travel for care. e. Government regulation is essential for market outcomes to maximize consumer welfare.
As output decreases, in the short run
A. the difference between total cost and average variable cost increases. B. the difference between average total cost and average variable cost increases. C. marginal cost eventually decreases. D. All of the above are correct.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C