Which of the following actions can be categorized as rent seeking?
a. Increase in the income tax rates by the government
b. Lobbying efforts of individuals or groups to gain favors from the government
c. Profit maximizing firms charging a price greater than their marginal costs
d. Export of goods from developing to developed countries
e. Government intervention in the real estate market
b
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The level of crowding out associated with a tax cut will be smaller if the tax change has a supply-side effect than it will be if it only has a demand-side effect
Indicate whether the statement is true or false
According to the interest rate effect, a decrease in the price level will
A) decrease the real value of money balances, which causes total planned real expenditures to increase. B) cause interest rates to fall, which generates an increase in borrowing, so that total planned real expenditures increase. C) lead to a decrease in net exports, which causes total planned real expenditures to decrease. D) increase the real value of money balances, which causes interest rates to increase, thereby reducing total planned expenditures.