What are direct expenditure offsets and how do they influence the effects of fiscal policy?
What will be an ideal response?
When government spending competes with the private sector, direct expenditure offsets may occur. If the government provides lunches for children in school, families can reduce their expenditures on food to some extent. The impacts of fiscal policy actions on real GDP are reduced. In the extreme case, the government spending multiplier may be zero.
Economics
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Entitlement spending is included in discretionary spending for the U.S. government
Indicate whether the statement is true or false
Economics
If a short-run fixed cost is sunk, then
A) losses can be minimized by shutting down. B) the firm should keep producing to cover the sunk cost. C) the cost cannot be avoided by shutting down. D) Both B and C.
Economics