An Increase in Government Spending Will Completely Crowd Out Investment

question 52

Multiple Choice

An increase in government spending will completely crowd out investment if

• A) money supply is increased at the same time.
• B) money demand is not sensitive to the interest rate.
• C) the economy is operating at capacity.
• D) the economy is operating well below capacity.

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Definitions:

Unprotected Sex

Engaging in sexual activities without the use of contraceptives or barrier methods, increasing the risk of sexually transmitted infections (STIs) and unwanted pregnancies.

HIV

Human Immunodeficiency Virus, a virus that attacks the immune system and can lead to AIDS if not treated.

Market Economy

An economic system in which production and prices are determined by unrestricted competition between privately owned businesses.

Cash Capital

The amount of liquid assets or cash that a company or individual has available for immediate use or investment purposes.