"We Lose More by Letting the Company Fail Than by Having

question 37

Multiple Choice

"We lose more by letting the company fail than by having the government save it." This was most likely said by an economist who believes that

• A) crowding out is complete.
• B) bailouts are sometimes necessary.
• C) the tax multiplier is larger than the government spending multiplier.
• D) the AS curve is vertical.
• E) the AS curve is upward-sloping.

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Definitions:

Exclusive Jurisdiction

The sole authority of a particular court to hear and decide on cases within a specific area of law or geographic location, barring other courts from involvement.

Bankruptcy

Bankruptcy is a legal status for individuals or corporations that cannot repay the debts owed to creditors, leading to a court-supervised process of asset liquidation or reorganization to settle the debts.

Divorce

The legal dissolution of a marriage by a court or other competent body.

Diversity-of-Citizenship

A condition in civil law cases where the parties are citizens of different states or a party is a citizen of a foreign country, potentially giving federal courts jurisdiction.