According to the crowding-out view, budget deficits will:
A. reduce interest rates.
B. increase interest rates and retard private investment.
C. reduce the investments of foreigners in the United States.
D. increase the capital stock available to future generations.
Answer: B
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In exchange for a share of the revenues earned on campus, State U has granted CheapFizz the exclusive right to sell soft drinks in the student union and in vending machines on campus. Prior to the deal, three soft drink companies sold beverages on campus; now no other soft drink company is allowed to sell its products on campus. Prior to the deal, a 12-ounce can of CheapFizz sold for 75 cents. After the deal you would expect a 12-ounce can of CheapFizz to sell for:
A. more than 75 cents because CheapFizz is the only company that can sell soda on campus. B. 75 cents because that is the market price. C. less than 75 cents because CheapFizz will have greater volume and so can lower its price. D. more than 75 cents because the demand curve for CheapFizz soda will shift to the left.
Optimal currency areas should have ________ in order to succeed
A) high labor mobility B) low labor mobility C) imperfectly mobile capital D) few policy externalities
Payments to households not in exchange for goods and services currently produced are:
a. transfer payments. b. government purchases. c. consumption expenditures. d. investment expenditures.
How does moral hazard affect market outcomes?