Crowding out due to government borrowing occurs when
A) lower interest rates increase private sector investments
B) lower interest rates decrease private sector investment
C) higher interest rates decrease private sector investment
D) a smaller money supply increase private sector investment
E) a smaller money supply decrease private sector investment
Answer: C) higher interest rates decrease private sector investment
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If the supply curve for housing has the normal positive slope, rent controls are likely to: a. increase the quantity of available housing
b. improve the quality of available housing c. create a larger shortage than if the supply curve were vertical. d. help low-income families find suitable housing.
Which of the following statements is not correct?
a. Welfare programs may encourage illegitimate births. b. The decline in welfare benefits since the 1970s has been associated with a decline in the percentage of children living with a single parent. c. Welfare programs may reduce incentives for people to work. d. A negative income tax program uses tax revenues collected from high-income families to provide cash subsidies to low-income families.