How does an increase in the savings rate affect the multiplier in an economy, if at all?
a) The multiplier would turn from positive to negative.
b) The multiplier would stay the same.
c) The multiplier would increase.
d) The multiplier would decrease.
Ans: d) The multiplier would decrease.
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Which of the following is NOT an objective of economic regulation?
A) to regulate the prices enterprises are allowed to charge B) to fix prices so that they are never allowed to rise C) to keep rates of return in an industry at a competitive level D) to prevent monopoly profits
The crowding-out effect indicates that budget deficits
a. will stimulate aggregate demand and, therefore, exert a strong impact on output and employment. b. will lead to additional borrowing and higher interest rates that will reduce the level of private spending. c. are highly appropriate when the threat of inflation is present. d. are highly appropriate when the threat of recession is present.