Which of the following correctly explains the crowding-out effect?
a) An increase in government expenditures decreases the interest rate and so increases investment spending.
b) An increase in government expenditures increases the interest rate and so reduces investment spending.
c) A decrease in government expenditures increases the interest rate and so increases investment spending.
d) A decrease in government expenditures decrease the interest rate and so reduces investment spending.
Answer: b) An increase in government expenditures increases the interest rate and so reduces investment spending.
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Moving along the short-run Phillips curve, a ________ unemployment rate can only be achieved by paying the cost of ________
A) lower; a lower inflation rate B) lower; a lower price level C) lower; a higher expected inflation rate D) lower; a higher inflation rate E) higher; a higher inflation rate
The Sherman Antitrust Act
a. was passed to encourage judicial leniency in the review of cooperative agreements. b. was concerned with self-interest dominated Nash equilibriums in prisoners' dilemma games. c. enhanced the ability to enforce cartel agreements. d. restricted the ability of competitors to engage in cooperative agreements.
Coordination failure is a situation in which workers and employers fail to achieve an outcome that all would prefer
Indicate whether the statement is true or false
An employer faces a higher minimum wage control where it cannot pay its workers any less than $10.25 an hour. The employer may react by
a. Doing nothing-it cannot violate the regulation b. Offering the employees fewer fringe benefits c. Increasing spending on workplace amenities d. Hiring additional workers