Which Statement Best Explains the Crowding-Out Effect

question 87

Multiple Choice

Which statement best explains the crowding-out effect?

• A) An increase in government expenditures decreases the interest rate and so increases investment spending.
• B) An increase in government expenditures increases the interest rate and so reduces investment spending.
• C) A decrease in government expenditures increases the interest rate and so increases investment spending.
• D) A decrease in government expenditures decreases the interest rate and so reduces investment spending.

---

Definitions:

Effortful Control

The ability to regulate one's emotions and actions through effort rather than through natural inclination.

Sociodramatic Play

A form of play where children enact roles and scenarios, using their imagination to explore social roles and relationships.

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, superego, and reality, often thought of as the "self."

Id

In psychoanalytic theory, the part of the personality which is the source of instinctual impulses and demands for immediate satisfaction of primitive needs.