The federal government has a large public debt that it finances through borrowing. As a result, real interest rates are higher than otherwise and the volume of private investment spending is lower. This illustrates the:
A. equation-of-exchange effect.
B. paradox of thrift.
C. crowding-out effect.
D. net export effect.
C. crowding-out effect.
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Critics of the RBC approach argue that it's hard to find productivity shocks large enough to cause business cycles. What is the RBC counterargument to this criticism?
A) Business cycles are always and everywhere a monetary phenomenon. B) Wars and military buildups could be considered productivity shocks. C) Business cycles could be caused by the accumulation of small productivity shocks. D) Business cycles are often caused by unobservable productivity shocks, which aren't apparent at the time they occur.
Indifference curves that cross violate the property of
a. the marginal rate of substitution. b. transitivity. c. indifference curves bowing inward. d. They do not violate any properties of indifference curves.
A profit-maximizing perfect competitor will ___________ operate at that output at which MC = MR.
A. always B. usually C. sometimes D. rarely
"As the price of gasoline increases, fewer people buy cars that are gas guzzlers." A graph showing this relationship would
A) have a positive relationshi