1/3 + 5/4
1/3 (4) = 4/12 5/4 (3) = 15/12 4/12 + 15/12 = 19/12 = 1 7/12
Crowding Out i. When is it a bigger problem? When is it not likely to be a problem? ii. Which economic school of thought thinks fiscal policy may be necessary and is effective? Why? (Discuss the multiplier, and interest rates and crowding out, in your answer). iii. Which school thinks it is ineffective? Why?
i. Bigger when econ is near full employment or when business is sensitive to interest rates. Less of a problem during deep recession when lots of excess capacity and little demand for loans. ii. Keynesian school, deficit financed fiscal policy is effective since economy won’t recover from recession quickly, and crowding out is not a problem. Crowding out is not a problem since businesses won’t demand loans during recession so interest rates won’t increase, and even if interest rates rise, businesses invest due to expected profit not interest rate. Excess capacity during recession also makes the spending multiplier bigger, so govt expenditure has multiplicative effect on the economy. iii. Neo Classical school thinks crowding out is a problem. Economy adjusts back to full employment quickly so businesses will demand loans and will be negatively affected by govt borrowing and higher interest rates. The quick adjustment also makes it likely that fiscal policy will overshoot full employment and cause inflation.
Scientist 1 A deep ocean of liquid water exists on Europa. Jupiter's gravitational field produces tides within Europa that can cause heating of the subsurface to a point where liquid water can exist. The numerous cracks and dark bands in the surface ice closely resemble the appearance of thawing ice covering the polar oceans on Earth. Only a substantial amount of circulating liquid water can crack and rotate such large slabs of ice. The few meteorite craters that exist are shallow and have been smoothed by liquid water that oozed up into the crater from the subsurface and then quickly froze. Jupiter’s magnetic field, sweeping past Europa, would interact with the salty, deep ocean and produce a second magnetic field around Europa. The spacecraft has found evidence of this second magnetic field. Scientist 2 No deep, liquid water ocean exists on Europa. The heat generated by gravitational tides is quickly lost to space because of Europa’s small size, as shown by its very low surface temperature (–160°C). Many of the features on Europa’s surface resemble features created by flowing glaciers on Earth. Large amounts of liquid water are not required for the creation of these features. If a thin layer of ice below the surface is much warmer than the surface ice, it may be able to flow and cause cracking and movement of the surface ice. Few meteorite craters are observed because of Europa’s very thin atmosphere; surface ice continually sublimes (changes from solid to gas) into this atmosphere, quickly eroding and removing any craters that may have formed. According to the information provided, which of the following descriptions of Europa would be accepted by both scientists? A) Europa has a larger diameter than does Jupiter. B) Europa has a surface made of rocky material. C) Europa has a surface temperature of 20°C. D) Europa is completely covered by a layer of ice.
The answer is D. The best way to find this answer is to skim for key words in both sections A) only scientist 1 mentions Europa's small size so this is incorrect B) neither scientists mention a rocky surface C) Only scientist 2 mentions a specific temperature D) both scientists talk extensively about ice