In the extreme case of a complete crowding-out effect
A) an increase in interest rates will stimulate investment spending.
B) an increase in government spending will not increase aggregate demand.
C) an increase in tax rates will stimulate work effort.
D) an increase in government spending will stimulate investment spending.
B
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Compare the effect on the price level and real GDP of a decrease in tax rates assuming a supply-side effect versus no supply-side effect
Compared to no supply-side effect, including a supply-side effect for the decrease in tax rates will cause the price level to increase ________ and real GDP to increase ________. A) more; less B) less; less C) more; more D) less; more
When discussing rules that governments use to intervene in a market, we can take a ________ approach where we discuss what governments should do, or a ________ approach where we discuss what governments actually do
A) normative; positive B) positive; normative C) optimistic; cynical D) bipartisan; normative