"The crowding-out effect occurs when a government budget surplus reduces private savings." Is the previous statement true or false? Explain your answer
What will be an ideal response?
The statement is false. The crowding-out effect occurs when a government budget deficit reduces investment, not saving. Indeed, the crowding-out effect predicts that a government budget deficit results in a higher real interest rate, which increases the quantity of private savings.
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The p-value for a one-sided left-tail test is given by
A) Pr(Z - tact ) = ?(tact). B) Pr(Z < tact ) = ?(tact). C) Pr(Z < tact ) < 1.645. D) cannot be calculated, since probabilities must always be positive.
A nation's annual balance of payments statement must always balance because:
A. A nation's imports are limited to the value of its exports B. A nation's exports and imports are always paid with dollars C. All international transactions must be settled in one way or another D. A trade deficit must be matched by an equal surplus of investment income