Describe the three cases of the crowding-out effect

Assignment Help Econometrics
Reference no: EM13187074

Crowding-out effect means that the increase in government spending increases the interest rate, which reduces the private investment. There are three cases of the crowding-out effect. A zero crowding-out effect occurs when the government spending increases, but the investment does not decrease. In terms of absolute values, a partial crowding-out effect occurs when the increase in government spending is greater than the decrease in investment. In terms of absolute values, a complete crowding-out effect occurs when the increase in government spending equals the decrease in investment. Then if the government spending increases by $10 billion, the investment later on decreases by $10 billion.

Reference no: EM13187074

Questions Cloud

Supply chain management a logistics perspective : Supply Chain Management A logistics perspective. Case 3-1 Red Fish, Blue Fish, LLP: A Sequel 1. What are the advantages and potential disadvantages to Red Fish, Blue Fish of having China
How the determination of the price for the same product : Select a product or service you use on a regular basis and discuss how the price you pay for that product or service is the result of a market economy. Discuss how the determination of the price for that same product or service would be set in a c..
External pressure equal to the final pressure of the gas : (a) reversibly, (b) against a constant external pressure equal to the final pressure of the gas, and (c) freely (against zero external pressure)
Calculate the distance between the two areas : a roadside picnic area is located at the 1453 km marker of a highway . the next picnic area is at the 1615 km marker . Calculate the distance between the two areas.
Describe the three cases of the crowding-out effect : A zero crowding-out effect occurs when the government spending increases, but the investment does not decrease. In terms of absolute values, a partial crowding-out effect occurs when the increase in government spending is greater than the decrease..
Find the integrating factor : Suppose that ydx + (yx^2-x)dy = 0 has an integrating factor that is a function of x alone [i.i., mu = mu(x)]. Find the integrating factor and use it to solve the differential equation.
Customers and potential customers : How does this Web site help AutoNation forge closer ties with customers and potential customers?
Carrying out tlc with a mixture of two compounds a and b : You are carrying out tlc with a mixture of two compounds A and B. A is less polar than B. On a REVERSE PHASE plate
Edinburgh airport case study : Discuss why a relational database would be suitable for the organisation in the case study and provide three reasons for this recommendation and discuss using three advantages that a database management system provides to an organisation.

Reviews

Write a Review

Econometrics Questions & Answers

  What would be the inflation rate for equation of exchange

If the quantity of money rose 10%, velocity was unchanged, and output rose 6%, what would be the inflation rate, according to the equation of exchange? Equation given: (Quantity of Money) * (It's velocity) = (Price level) * (Output) or ((QM) * V ..

  Find probability for five employees gets a computer

A firm recieves a shipment of 100 personal computers for use by its staff. Of these 100 computers, five are defective and not usable without repair. In a particular office, there are five employees. What is the probability that each of these five e..

  What would the optimal production subsidy be

Calculate the total effect on welfare of a tariff of 5 per unit levied on imports. Calculate the total effect of a production subsidy of 5 per unit. Why does the production subsidy produce a greater gain in welfare than the tariff? What would the opt..

  Question about human capital model

A labor economist estimates a regression of log earnings on schooling, experience, ability, as measured through, and interactions in schooling and experience,

  How much will deposits in the commercial banks change

The Federal Reserve has just purchased $100 million in Treasury bills from commercial banks. b. If the public holds a fixed amount of currency (so that all loans create an equal amount of deposits in the banking system), the minimum reserve ratio ..

  Price that consumers pay and the quantity of cakes

The demand in the cake market is Qd =500 - 10p and unrestricted supply is Qs = 100 + 10p. Suppose the government imposes a baker's license that reduces cake supply to Q¢s =10p. Calculate the numerical values of the following:a. Price that cons..

  What is the optimal pure bundling price

Microsoft sells three different programs in their office suite: Word, Excel and PowerPoint. Each has a marginal cost of $15. There are three types of con- sumers, writers, accountants and professor, who have the following values for the three diff..

  Estimate annual operating and maintenance costs

Value Lodges owns an economy motel chain and is considering building a new 200-unit model. The cost to build is estimated at $8,000,000; estimates for motel furnishings will cost an additional $700,000 and will require replacement every 5 years. A..

  Kuznets hypothesized in economic development

In the name of Simon Kuznets is the concept that the relationship in GDP and inequality is nonlinear. Kuznets hypothesized three phases in economic development.

  Calculate real gdp for 2007

The Republic of Republic produces two goods/services, fish (F) and chips (C). In 2006, the 200 units of F produced sold for $3 per unit and the 500 units of C produced sold for $1 per unit. In 2007, the 300 units of F produced sold for $4 per unit..

  What price should managers charge in each market

The demand curve for the firm's output in the second market is P2 = 80 - 2Q2, where P2 is the price of the product and Q2 is the amount sold in the second market. The firm's marginal cost curve is 5 + Q, where Q is the firm's entire output (destin..

  What will be the total price and the per session price

Your firm designs training materials for computer training classes, and you have just received a request to bid on a contract to produce a complete set of training manuals for an 8-session class. From previous experience, you know that your firm f..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd