If the government adopts an expansionary fiscal policy that requires more government borrowing in the money market, then interest rates are likely to:
A. rise and partially offset the effects of the fiscal policy.
B. rise and partially reinforce the effects of the fiscal policy.
C. fall and partially offset the effects of the fiscal policy.
D. fall and partially reinforce the effects of the fiscal policy.
Answer: A
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
When output is less than the efficient level,
A) consumers are willing to pay more for another unit than it costs to produce the unit. B) the amount consumers are willing to pay equals the cost of production. C) the cost of production is greater than the price consumers are willing to pay. D) the production costs can't be measured. E) the marginal cost of producing the good must be greater than the marginal benefit from the good.
Explain the difference between induced consumption expenditure and autonomous consumption expenditure. Why isn't all consumption expenditure induced expenditure?
What will be an ideal response?
If the consumption of a good by one person reduces its consumption by others, then the good is
A. nonrivalrous in consumption. B. rivalrous in consumption. C. nonexcludable. D. excludable. E. b and d