The crowding-out effect of an expansionary fiscal policy is the result of government borrowing in the market which
A. increases interest rates and net investment spending in the economy.
B. increases interest rates and decreases net investment spending.
C. decreases interest rates and increases net investment spending.
D. decreases interest rates and net investment spending.
B. increases interest rates and decreases net investment spending.
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A perfectly competitive firm will continue to operate in the short run when the market price is below its average total cost if the
A) marginal revenue is greater than marginal cost. B) price is at least equal to the minimum average variable cost. C) total fixed costs are less than total revenue. D) marginal cost is minimized. E) price is also less than the minimum average variable cost.
Pegging a country's exchange rate to the dollar can be advantageous if
A) investors believe the dollar to be more stable than the domestic country's currency. B) a country wishes to conduct independent monetary policy. C) imports are not a significant fraction of the goods the country's consumers buy. D) the country does not trade much with the United States.