Refer to Figure 12.1. Assuming the economy is on the production possibilities curve, crowding out suggests that an increase in government spending financed by internal borrowing would move the economy from point 
A. C to point E.
B. C to point A.
C. C to point F.
D. A to point C.
Answer: B
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Given that food production is crucial to an economy, why shouldn't governments subsidize farmers' water use?
What will be an ideal response?
Capital formation in the colonies was mostly due to
a. savings and investments from the colonists themselves. b. capital inflows from English merchants. c. capital inflows from the English crown. d. capital inflows from international sources other than England.
Suppose that national saving is $1456 billion, investment is $1945 billion, and private saving is $1590 billion. How much is the current account balance?
A. -$221 billion B. $221 billion C. $489 billion D. -$489 billion
An unintended consequence of price ceilings is:
A. the loss of surplus always outweighs the benefits of the policy. B. the producers increase the quality of the goods sold. C. non-price rationing must occur, and can lead to bribes. D. the transfer of surplus from producer to consumer rarely is recognized.