Crowding out will be less likely to occur if:
A. business investment depends on interest rates.
B. interest rates rise when the budget deficit increases.
C. interest rates fall when the budget deficit decreases.
D. business investment does not depend on interest rates.
Answer: D
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In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the
equilibrium quantity (Q) of X. Refer to the given information. A reduction in the number of firms producing X will: A. increase D, increase P, and increase Q. B. increase S, decrease P, and increase Q. C. decrease S, increase P, and decrease Q. D. decrease S, decrease P, and increase Q.