Crowding out occurs by:
a. causing reduced government purchases of goods and services
b. reducing the value of the multiplier used for government purchases of goods and services by increasing the interest rate.
c. reducing the value of the multiplier used for government purchases of goods and services by increasing the marginal propensity to consume.
d. reducing the value of the multiplier used for government purchases of goods and services by decreasing the marginal propensity to consume.
e. causing reduced imports of goods and services.
b
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The main difference between a repo and federal funds transaction is that
A) the repo transaction uses the securities for collateral while the federal funds transaction does not have collateral. B) the federal funds transaction uses securities for collateral while the repo transaction does not have collateral. C) the repo transaction has an agreed upon interest rate while the federal funds transaction has a spread between the sale and purchase price of securities. D) the federal funds transaction is normally overnight while the typical repo agreement is for 90 to 180 days.
The evidence suggests that in rich countries, a depreciation
A) immediately improves the trade balance. B) eventually improves the trade balance. C) first improves, but then worsens the trade balance. D) has no effect on the trade balance. E) none of the above