Explain the crowding-out effect.
What will be an ideal response?
The crowding-out effect is the notion that government borrowing to finance a deficit may crowd out or reduce private borrowing. To the extent that this occurs, the expansionary impact of fiscal policy is reduced because increased demand by the government is partially offset by reduced demand in private investment.
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Monetarists think that the Fed should use ________ as a target when conducting monetary policy
A) the inflation rate B) the Treasury bill rate C) the money supply D) the federal funds rate E) the unemployment rate
The quantity supplied of a particular good is the amount of the good that
A) households are willing to consume at each particular price. B) firms will actually end up buying at a particular price during a given time period. C) firms are willing to sell at each price during a particular time period. D) households want firms to sell at each price during a particular time period.