Why might fiscal stimulus crowd out investment?
What will be an ideal response?
Fiscal stimulus, such as an increase in government expenditure or a decrease in taxes, increases the budget deficit. The increase in the budget deficit increases the (government's) demand for loanable funds, thereby raising the real interest. The higher real interest rate decreases—crowds out—investment.
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If an asymmetry of information is removed and laborers' preferences change against employment, this will shift the equilibrium in the labor market to the
A. northwest. B. northeast. C. southwest. D. southeast.
Suppose the economy's production function is Y = AK0.3N0.7. If K = 2000, N = 100, and A = 1, then Y = 246. If K rises by 10%, and A and N are unchanged, by how much does Y increase?
A) 30% B) 10% C) 6% D) 3%
What conditions should be met to practice price discrimination in a market?
Which of the following formulas would show price elasticity of supply?
a. 20% + +5% = +25 b. 20% – +5% = +15 c. 20% × +5% = +100 d. +20% ¸ +5% = +4