The crowding-out effect of expansionary fiscal policy suggests that:
A. government spending increases at the expense of private investment.
B. imports replace domestic production.
C. private investment increases at the expense of government spending.
D. saving increases at the expense of investment.
A. government spending increases at the expense of private investment.
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Countercyclical fiscal policy refers to
a. any fiscal policy that cycles between budget surpluses and budget deficits b. the use of taxes and government spending to keep the economy close to potential GDP in the short run c. any fiscal policy that is employed during a business cycle d. the use of open market purchases of bonds to keep the economy close to potential GDP in the short run e. the use of changes in tax rates to keep the economy at potential output in the long run
Refer to the following graph.
Elasticity is greatest at point:
A. A. B. B. C. C. D. It is the same everywhere along this supply curve.