A Decline in Borrower Net Worth Will Result in

question 11

Multiple Choice

A decline in borrower net worth will result in

• A)lower output, but a higher price level.
• B)a lower price level, but higher output.
• C)lower output and a lower price level.
• D)higher output and a higher price level.

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Definitions:

Crowding Out

A situation where increased public sector spending leads to a reduction in private sector spending, which can dampen or negate the intended stimulative effect of the government's expenditures.

Investment Spending

Expenditure on capital goods including buildings, machinery, and equipment, which is intended to increase future production.

Aggregate Expenditure

The total amount spent on goods and services in an economy at a particular time.

Federal Budget Deficits

The excess of federal government expenditures over its revenues within a given fiscal year, leading to borrowing or debt accumulation.