Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $700 million. This is an example of
A) incomplete crowding out.
B) complete crowding out.
C) zero crowding out.
D) a and c
E) none of the above
B
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Which of the following is false about potential output?
A. It is the level of output an economy can achieve when labor is employed at its natural level. B. It is the long run output level that guarantees price stability. C. If a country is producing its potential output, then it is producing at a point on its production possibilities frontier. D. It is also called the natural level of real GDP.
Which of the following would lead to a short-run market surplus for tomatoes?
A) The price of tomatoes increases. B) A new government study shows that tomatoes have a greater risk of contamination from salmonella. C) An increase in the price of potatoes. D) A decrease in the number of tomato growers.