Refer to Figure 18-1. Suppose that the U.S. government deficit ...

[humphriesbr@me.com]

Refer to Figure 18-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?
 
  A) Supply would increase, demand would increase and the economy moves from D to A to B.
  B) Supply would decrease, demand would increase and the economy moves from A to D to C.
  C) Demand would increase and the economy moves from A to B.
  D) Demand would decrease and the economy moves from B to A.

Question 2

Crowding out refers to a decline in ________ as a result of an increase in ________.
 
  A) government purchases; private expenditures B) government purchases; tax rates
  C) private expenditures; government purchases D) tax revenues; unemployment

[31809pancho]

Answer to Question 1

D

Answer to Question 2

C

[humphriesbr@me.com]

Thanks for the timely response, appreciate it

[nanny]

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