If a fiscal expansion financed by government bond sales does not affect interest rates, then:
A. no crowding out will occur.
B. crowding out will be so great that output will decline.
C. crowding out will be relatively large.
D. crowding out will be relatively small.
Answer: A
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The free-rider problem arises when: a. goods cease to be scarce
b. goods are produced by the government. c. goods can't be provided exclusively to paying customers. d. the marginal benefit to a private individual outweighs the marginal cost of producing a good.
If the population is split up into quintiles by income, the bottom quintile would include:
A. the poorest 20 percent of the population. B. the poorest half of the population. C. the poorest 60 percent of the population. D. the richest half of the population.
Demand for movie rentals is highly elastic. A video store that raises the price of a rental will:
a) lose revenue b) gain revenue c) possibly gain or lose revenue d) see no change in revenue
Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 2?
A. $21.2 billion B. $20 billion C. $20.4 billion D. $20.8 billion