Crowding out can weaken the effect of an expansionary fiscal deficit. Explain.
What will be an ideal response?
If public borrowing to finance the public deficit crowds out private borrowing and spending that would have increased aggregate demand, then the effect of government spending has been lessened. In other words, some of that spending would have taken place anyway as a result of private borrowing which has been crowded out.
Economics
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Refer to Figure 2-2. What is the opportunity cost of one pound of meat?
A) pound of vegetables B) pounds of vegetables C) 1.6 pounds of vegetables D) 16 pounds of vegetables
Economics
Which of the following is generally considered the most regressive type of tax?
a. gift tax b. federal income tax c. excise tax d. payroll tax
Economics