The Crowding Out Effect Is Zero If

question 40

Multiple Choice

The crowding out effect is zero if

• A)the LM-curve is horizontal
• B)the LM-curve is vertical
• C)the central bank conducts open market sales following fiscal expansion
• D)income is stimulated via a tax cut rather than an increase in government spending
• E)none of the above

---

Definitions:

Overapplied Overhead

A situation where the estimated manufacturing overhead cost is more than the actual overhead incurred during a period.

Value Chain

A model that describes the full range of activities needed to create a product or service, from initial conception through the various phases of production to the final customer.

Service Entity

An organization or a part of an organization that provides services to customers or internal partners.

Merchandising Entity

A type of business that purchases finished goods for resale, earning a profit by selling these goods at a higher price.