If the Government Has a Budget Deficit, Crowding Out Might

question 28

Multiple Choice

If the government has a budget deficit, crowding out might occur. Crowding out leads to all of the following EXCEPT

• A) a smaller capital stock in the future.
• B) a decreased quantity of investment.
• C) a higher real interest rate.
• D) decreased private saving.

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Definitions:

Demand Curves

Graphs showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage change.

Demand

The quantity of a product or service consumers are willing and able to purchase at various price levels.

Convenience Store Products

Items sold in convenience stores, often including snacks, beverages, tobacco products, and household essentials.