Answer to Question #214165 in Macroeconomics for Ebi

Question

1. Crowding out due to government borrowing occurs when ......................

a.

lower interest rates decrease private sector investment.

b.

higher interest rates decrease private sector investment.

c.

a larger money supply increases private sector investment.

d.

lower interest rates increase private sector investment.

2.Which of the following correctly fills in the blank in the definition below?

...................... is a variable whose variability is explained by causes outside the causal model.

a.

Discrete variable

b.

Response variable

c.

Endogenous variable

d.

Exogenous variable.

3.How many of the following formulas are correct?   

w = W/P   

MPL=dY/dL

MPS= 1-MPL

MY=PT

where w: real wage, W: money wage, P: price level, Y: output, L: labor, MPL: marginal product of labor, MPS: marginal propensity to save, M: money supply, T: transactions. 

a=4

b=1

c=3

d=2

Answer 1

1)b.higher interest rates decrease private sector investment.

2)c.Endogenous variable.

3)d=2