If Crowding Out Occurs in the Long Run and the Government

question 131

Multiple Choice

If crowding out occurs in the long run and the government increases spending for non- investment projects such as defense, then the additional government spending:

• A) replaces a larger amount of private investment.
• B) decreases total investment spending in the economy.
• C) replaces an equivalent amount of private non- investment.
• D) enhances private investment by the same amount.

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Definitions:

Bad Debt

A financial loss that occurs when a debtor fails to repay a loan or credit extended, considered non-recoverable and potentially eligible for a tax deduction.

Professional Gambler

Professional Gambler is an individual for whom gambling is considered a trade or business, allowing them to deduct losses and expenses related to their gambling activities as business expenses.

Illegal Information

Information obtained or used in a manner that violates laws or regulations.

Illegal Parking

The act of parking a vehicle in a restricted or unauthorized location, which is against the law and may result in fines.