Crowding out occurs because expansionary fiscal policy:
A) appreciates the exchange rate.
B) lowers foreign income.
C) lowers the interest rate.
D) increases net exports.
Answer: A) appreciates the exchange rate.
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The Lost Decade refers to the years between approximately
A) 1975 and 1985. B) 1980 and 1990. C) 1987 and 1997. D) 1972 and 1980. E) 1960 and 1970.
Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only weight .5 on utility earned in future periods. In period 1 she comes up with a plan, which involves taking some action that leads to a loss of C utils in period 2 but provides a benefit of B utils in period 3 . What values of B and C will lead her to behave inconsistently and not follow through on
her plans? a. C < B < 2C. b. B < C. c. B > 2C. d. B < C < 2B.