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Which of the following is a possible effect of an increase in the price level in an economy
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- Crowding out occurs whenA.increases in investment and consumption cause interest rates to rise, reducing the ability of the government to borrow funds.B.decreases in government spending cause interest rates to rise, reducing investment and consumption.C.increases in taxes cause interest rates to rise, reducing investment and consumption.D.increases in government spending cause interest rates to fall, reducing investment and consumption.E.increases in government spending cause interest rates to rise, reducing investment and consumption.
- Consider five individuals with different occupations.Allen:prepares taxeswants ribsBetty:does dry cleaningwants computer fixedCalvin:fixes computerswants breadDiedre:bakes breadwants taxes preparedEric:barbecues ribswants dry cleaningIn a barter system which of the following pairs has a double coincidence of wants?1)Diedre and Calvin2)Allen and Eric3)Both A and B are correct.4)None of the above are correct.
- 1. reduced taxation (increases disposable income)2. weak exchange rate (boost export growth)3. lower interest rates (more credit)- Anything that increases aggregate demand