If the economy is operating at capacity, an increase in government spending will ________ investment.
A. partially crowd out
B. minimally crowd out
C. have no crowding-out effect on
D. completely crowd out
Answer: D
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The term that is used to refer to a situation in which one party to a transaction has more or better information than the other party is
A) adverse selection. B) asymmetric information. C) moral hazard. D) deceptive trade practices.
When the movie Jurassic Park debuted in Westwood, California, the price of tickets was $7.50. After several months the ticket price had fallen to $4.00. This is an example of
A) peak-load pricing. B) second-degree price discrimination. C) a two-part tariff. D) tying. E) none of the above
Fiscal policy moved toward expansion during the 1980s but toward restriction during the 1990s. How did these differences affect the economy?
a. The expansionary fiscal policy of the 1980s led to strong growth while the restrictive policy of the 1990s led to stagnation. b. The expansionary fiscal policy of the 1980s led to weaker growth than the restrictive policy of the 1990s. c. The expansionary fiscal policy of the 1980s generated more rapid growth than the restrictive policy of the 1990s. d. There is little evidence that the differences in fiscal policy between the two decades exerted much impact on either aggregate demand or real output.
If the desired fiscal stimulus is $20 billion and the desired AD increase is $50 billion, we can conclude that
A. There is an inflationary gap. B. The MPC is 0.60. C. The multiplier is 2.0. D. The MPS is 0.60.