Crowding out refers to a decline in ________ as a result of an increase in ________
A) government purchases; private expenditures B) government purchases; tax rates
C) private expenditures; government purchases D) tax revenues; unemployment
C
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Use the above table. Assuming constant opportunity costs, if countries Alpha and Beta specialize based on comparative advantage, then they will trade if the rate of exchange is
A) 5 knives for 1 fork, and Alpha imports forks. B) 0.5 knives for 1 fork, and Alpha imports forks. C) 0.5 fork for 1 knife, and Beta imports knives. D) 6 forks for 1 knife, and Beta imports knives.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher