Which of the following correctly explains the crowding-out effect?
a. An increase in government expenditures decreases the interest rate and so increases investment spending.
b. An increase in government expenditures increases the interest rate and so reduces investment spending.
c. A decrease in government expenditures increases the interest rate and so increases investment spending.
d. A decrease in government expenditures decreases the interest rate and so reduces investment spending.
b
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Please draw a figure illustrating the actions the central bank must take to maintain a fixed exchange rate following an increase in output
What will be an ideal response?
GDP includes
a. the value of goods and services such as soil erosion and deforested landscape b. the value of all personal property c. the cleaning-up expenses associated with pollution d. the value of leisure time e. the illegal activities related to the underground economy