Crowding out refers to the situation in which:
a. foreigners sell their bonds and purchase U.S. goods and services.
b. borrowing by the federal government raises interest rates and causes firms to invest less.
c. increased federal taxes to balance the budget causes interest rates to increase and consumer credit decreases.
d. borrowing by the federal government causes state and local governments to lower their taxes.
b
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If the Fed is concerned about a possible recession, it ________ the federal funds rate, which ________ the quantity of money and ________ the amount of bank loans
A) raises; decreases; decreases B) lowers; decreases; decreases C) lowers; increases; decreases D) raises; increases; increases E) lowers; increases; increases
Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them
a. True b. False Indicate whether the statement is true or false