In the Classical Model with an Open Economy,an Increase in Government

question 43

True/False

In the classical model with an open economy,an increase in government purchases may not cause complete crowding out,but crowding out will be complete worldwide.

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Definitions:

Tax Rate

Tax rate is the percentage at which an individual or corporation is taxed by the government on their income, assets, or transactions.

Financial Leverage

The strategy of using loans to increase the prospective benefits of an investment.

Debt/Equity Ratio

A gauge for comparing the mix of a company's funding through shareholders' equity versus debt, frequently applied to understand the company's use of financial leverage.

Retained Earnings

Retained earnings represent the portion of net income left after dividends have been paid to shareholders, which is then reinvested in the business.