The strict crowding-out argument relies on the assumption that
A. the government must raise taxes to pay for spending, and the tax increase crowds out the stimulative effect of increased spending.
B. the total flow of saving is a fixed amount.
C. investment is invariant to interest rates, but very dependent on aggregate spending.
D. consumption will rise to absorb most of an increase in income, and investment will accordingly fall.
Answer: B
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Predatory pricing
A) is extremely hard to document in the U.S. economy today. B) is most often practiced in the retailing industry. C) is not legal under U.S. law but is regularly practiced by foreign firms competing in the United States. D) is principally responsible for the decline of competition in the oil industry.
In the long run, a perfectly competitive firm leaves the market if the market price is less than the firm's average total cost
Indicate whether the statement is true or false
Human capital includes investments in education and skills.
Answer the following statement true (T) or false (F)
A firm charges a price so low that it prevents other firms from entering the market. This is an example of:
A. a tying contract. B. limit pricing. C. price discrimination. D. predatory pricing.