If an Increase in the Budget Deficit Reduces National Saving

question 24

Multiple Choice

If an increase in the budget deficit reduces national saving and investment, we have witnessed a demonstration of

• A) intermediation.
• B) equity finance.
• C) crowding out.
• D) the investment fund effect.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping due to the law of demand.

Cost Function

A mathematical relationship that describes how the costs incurred by a company vary with the level of output or production.

Cartel Arrangement

An agreement among competing firms in the same industry to control prices, limit output, or divide markets, in order to maximize profits collectively.

Manufacturing Plant

A facility that is equipped with machinery and staff for the purpose of producing goods on a large scale.