When the U.S. government runs a deficit, the resulting higher interest rate:
A. increases foreigners' willingness to invest in the U.S., which "crowds out" domestic investment.
B. increases firms' desire to invest, but "crowds out" domestic investment.
C. reduces firms' desire to invest, and "crowds out" domestic investment.
D. reduces foreigners' willingness to invest in the U.S., but still "crowds out" domestic investment.
Answer: C
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Answer the following statement true (T) or false (F)
Explain how inflation can lead to distortions
What will be an ideal response?
Which of the following statements correctly identifies a difference between labor and land?
A) Land can be rented but not owned by a firm, whereas labor can be rented or owned. B) Labor can be rented but not owned, whereas land can be rented or owned by a firm. C) Labor is hired until a point where the marginal product of labor equals the price of labor, whereas land is rented until a point where the average product of land equals the price of land. D) Labor is hired until a point where the average product of labor equals the price of labor, whereas land is rented until a point where the marginal product of land equals the price of land.
A decrease in the price level in an economy implies that _____
a. the spending multiplier will be equal to the marginal propensity to consume b. there will be an increase in investment c. there will be a decrease in investment d. the value of the spending multiplier will be equal to one e. the value of the spending multiplier will be equal to zero