The crowding-out effect refers to the situation where
A. foreign spending is favored over domestic spending.
B. government borrowing reduces private sector borrowing and spending.
C. the United States Treasury prints new money that the government uses to force increases in private investment.
D. the creation of large amounts of money to finance government borrowing produces an inflation that forces private spending to decrease.
B. government borrowing reduces private sector borrowing and spending.
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When the rate of interest in the economy increases
A) real Gross Domestic Product (GDP) will increase. B) the market price of existing bonds will fall. C) the asset demand for money will increase. D) the transaction demand for money will increase.
The principal difference between economic profits for a monopolist and for a competitive firm is that:
a. monopoly profits create major problems of equity whereas competitive profits do not. b. competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well. c. monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not. d. monopoly profits are usually larger than competitive profits.
Suppose that Venezuela produces beef and oil and it can switch production between each at a constant rate. If the most beef it can produce is 300 million pounds and the most oil it can produce is 50 million barrels, then what is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil?
Explain the three different types of money demand.
What will be an ideal response?