The crowding-out effect of expansionary fiscal policy suggests that:
A. consumer and investment spending always vary inversely.
B. it is very difficult to have excessive aggregate spending in the U.S. economy.
C. increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.
D. tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
Answer: C
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Which of the following is NOT a method for promoting global economic growth?
A) reliance on private markets to direct capital goods toward their best use B) Count on the world's governments to develop policies that promote economic growth in developing nations. C) Encourage population growth so that developing nations' labor supply increases. D) market based approach
Normal profit is a term for
a. explicit profit. b. the competitive rate of return. c. the accounting profit forgone. d. pure economic profit.