Suppose the government has a budget deficit of $2 billion. If the Ricardo-Barro effect is correct, then how much crowding out of investment occurs?
A) exactly equal to $2 billion dollars
B) more than $2 billion
C) some crowding out occurs, but less than $2 billion
D) No crowding out occurs and investment does not change.
E) No crowding out occurs because investment increases by $2 billion.
D
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In profit centers
a. Managers are easy to evaluate because there is a simple metric of how well they performed b. Managers typically do not have the information to run their division efficiently c. Managers' decisions rarely affect other divisions d. Managers typically do not have the incentives to run their division efficiently
Refer to the graphs and information below. Assume that prior to specialization and trade, Italy and Greece preferred points I and G on their respective production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in total output will be:
Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs below.
A. 5 steel and 15 chemicals
B. 10 chemicals
C. 15 steel and 5 chemicals
D. 25 steel