Crowding Out Is the Idea That an Increase in Government

question 111

True/False

Crowding out is the idea that an increase in government spending may cause a reduction in private sector spending.

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Definitions:

Capital Budgeting

The process by which a business evaluates and selects major capital investments based on their potential to generate additional revenue or reduce costs.

Simple Rate of Return

A method to evaluate the profitability of an investment by dividing the annual incremental net operating income by the initial investment cost.

Operating Expenses

Costs associated with a company’s operational activities, excluding direct labor and materials, that are necessary to run the business.

Sales Revenues

The total amount generated from selling goods or services before any expenses are subtracted.