A drop in consumption or investment spending caused by increased government spending is referred to as:
a. the multiplier effect.
b. an expansionary gap.
c. Ricardian equivalence.
d. the paradox of thrift.
e. crowding out.
e
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Suppose a consumer advocacy group has convinced legislators that vitamin pills should be free to consumers. Such a policy would enhance the health of the citizenry, they argue
Assuming a downward-sloping linear demand curve and a horizontal long-run supply curve, determine the resulting output and social welfare from such a policy. Compare this result to the competitive equilibrium.
The real interest rate is the
A) nominal interest rate plus the anticipated interest rate. B) nominal interest rate minus the anticipated interest rate. C) nominal interest rate plus the anticipated inflation rate. D) nominal interest rate minus the anticipated inflation rate.