Crowding out due to government borrowing occurs when
A) lower interest rates increase private sector investments
B) lower interest rates decrease private sector investment
C) higher interest rates decrease private sector investment
D) a smaller money supply increase private sector investment
E) a smaller money supply decrease private sector investment
Answer: C) higher interest rates decrease private sector investment
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Past expenses are irrelevant to supply decisions, because
A) expenses incurred in the past never affect the opportunities available in the present. B) it is essential to avoid bankruptcy. C) no one remembers the past. D) supply decisions depend on opportunities that will have to be forgone, not opportunities already forgone.
How do insurance companies try to reduce: 1) the moral hazard problem; 2) the adverse selection problem?
Other factors held constant, a decrease in resource prices will shift the aggregate:
A. demand curve leftward. B. demand curve rightward. C. supply curve leftward. D. supply curve rightward.
Which of the following is NOT a subgroup of the Federal Reserve System?
A. the Federal Reserve Banks B. the Federal Funds Market C. the Board of Governors D. the Federal Open Market Committee