Crowding out is a reduction in private investment caused by government budget deficits, and may partially offset the expansionary effects of fiscal policy. The exact degree of crowding out depends on all of the following except
A) how much of the deficit is financed by households, firms, and governments outside of the United States.
B) how much real interest rates increase.
C) the level of the marginal corporate income tax rate.
D) the sensitivity of investment to the real interest rate.
C
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Pizza at Home is a frozen pizza company that supplies several large grocery store chains. The managers of Pizza at Home are currently negotiating a four year contract with Saucy Pizza, a manufacturer of pizza sauce. Saucy Pizza will supply a specified quantity of canned tomato sauce to Pizza at Home over a four year period; however; Pizza at Home can ends its contract with Saucy Pizza at the end
of the first, second, or third years if Saucy Pizza does not supply quality tomato sauce. What can the manager of Pizza at Home do to avoid the end-game problem? A) Pay Saucy Pizza in full at the end of the third year. B) Offer to renew the contract with Saucy Pizza if they provide quality tomato sauce in all four years. C) Pay Saucy Pizza in equal installments at the end of each of the four years. D) Pay Saucy Pizza in installments at the end of the first, second, and third years.
Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,500 in income taxes. In this situation, the income tax system is
A) progressive. B) regressive. C) proportional. D) one of the above but we cannot tell which one without more information.
If the Fed wants to lower the interest rate, it will
a. increase the money supply b. decrease the money supply c. increase money demand d. decrease money demand e. simply set a lower market interest rate
Compared with a competitive market, a monopsonist will pay a ________ wage and hire ________ workers.
A. higher; more B. lower; more C. lower; fewer D. higher; fewer