“Crowding-out” refers to the process by which
A. high consumption leads to low saving and investment.
B. the Fed prevents “runs” on banks.
C. Fed sales of bonds reduce the ability of corporations to buy bonds.
D. increased government spending raises interest rates, thus lowering investment spending.
Answer: D
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With quantitative easing, the Fed purchases _____________________. With open market operations, the Fed purchases ______________________________
A) short-term and long-term government securities, as well as private sector bonds and securities; short-term government securities B) short-term government securities, only; long-term government securities, only C) long-term government securities, only; short-term government securities, only D) government securities, only; private sector bonds and securities
The outcome of the game in the figure shown will be:
This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.
A. Starbucks will expand and Dunkin Donuts will not.
B. Starbucks will not expand and Dunkin Donuts will.
C. Starbucks and Dunkin Donuts will both expand.
D. neither Starbucks nor Dunkin Donuts will expand.