The Strict Crowding-Out Argument Relies on the Assumption That

question 96

Multiple Choice

The strict crowding-out argument relies on the assumption that

• A)the government must raise taxes to pay for spending, and the tax increase crowds out the stimulative effect of increased spending.
• B)the total flow of saving is a fixed amount.
• C)investment is invariant to interest rates, but very dependent on aggregate spending.
• D)consumption will rise to absorb most of an increase in income, and investment will accordingly fall.

---

Definitions:

Freud's

Refers to the theories developed by Sigmund Freud that focus on the unconscious mind, psychosexual stages, and defense mechanisms that shape personality.

Correct Sequence

The proper or accurate order in which a series of events, actions, or things follow each other.

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety arising from unacceptable thoughts or feelings.

Repression

In psychoanalytic theory, the process of unconsciously excluding thoughts, feelings, or desires from consciousness, often because they are considered unacceptable.