An increase in government spending will completely crowd out investment if
A. money demand is not sensitive to the interest rate.
B. the economy is operating well below capacity.
C. money supply is increased at the same time.
D. the economy is operating at capacity.
Answer: D
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Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate him and share his 10million in profits equally with Irene or fight him and cause a 5million loss for each in a price war. In a sequential game, if Irene decides to enter the market, what would be Mattie’s best response? Accommodate Fight Run away Shut down
a. Shut down b. Fight c. Run away d. Accommodate
Under autarky, domestic producer surplus is represented by the area
A) above the supply curve and below the equilibrium price. B) above the demand curve and below the supply curve. C) above the supply curve and below the demand curve. D) below the demand curve and above the equilibrium price.
The rate of growth of output per worker in the United States between 1985 and 2014 was approximately equal to which of the following?
A) 1.7% B) 3.8% C) 4.8% D) 5.8%
When many substitutes exist for a good, demand will be
A) elastic. B) unit-elastic. C) inelastic. D) perfectly unit-elastic.