Author Question: The long-run opportunity cost of government spending crowding out private investment: a. equals ... (Read 21 times)

jeatrice · **on:** Jun 30, 2018

The long-run opportunity cost of government spending crowding out private investment:
a. equals about 10 percent of GDP.
b. lowers interest rates and results in lower interest income for U.S. resource owners.
c. would be greater if the government's expenditures were invested in building better highways and a more educated workforce.
d. results from the corresponding contractionary gap.
e. would be greater if the government's expenditures were devoted to increasing retirement benefits rather than to educating the work force.

Question 2

In periods of high inflation, _____.
a. people want to hold as much money as possible
b. the purchasing power of money decreases
c. the real interest rate exceeds the nominal interest rate
d. the nominal interest rates are likely to be low
e. the nominal interest rate equals the real interest rate