In a Normal IS-LM Framework, Crowding Out May Be Avoided

question 9

Multiple Choice

In a normal IS-LM framework, crowding out may be avoided if

• A)banks ration credit
• B)the government matches a tax increase with an increase in government purchases
• C)the central bank increases the money supply to accommodate fiscal expansion
• D)the central bank sells government bonds on a large scale
• E)both C and D

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Definitions:

Total Assets

The combined value of all assets, including cash, inventory, property, and equipment, owned by a person or business.

Stockholders' Equity

The portion of a company's assets that belongs to its shareholders, represented by capital stock and retained earnings.

Corporate Form

A business structure where the company operates as a separate legal entity from its owners, providing limited liability protection but facing double taxation.

Charter

A document that is issued by the state to set forth important terms and features regarding the creation of a corporation.