In an Open Economy, Crowding Out Occurs When an Increase

question 81

Multiple Choice

In an open economy, crowding out occurs when an increase in government spending results in:

• A) an increase in investment spending.
• B) an increase in public saving.
• C) a decrease in net exports.
• D) an increase in consumption spending.

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Definitions:

Transfer Ownership

The act of moving legal title and rights from one entity or person to another.

Capital Budgeting

Capital budgeting is the process by which companies evaluate and prioritize investments in long-term assets and projects based on potential returns and strategic goals.

Long-Term Investments

Investments held for an extended period, typically exceeding one year, intended for growth, income, or both.

Planning

The process of setting goals, establishing strategies, and outlining tasks and schedules to achieve these goals.