The Crowding-Out Effect Recognizes That If the Government Sells Bonds

question 175

Multiple Choice

The crowding-out effect recognizes that if the government sells bonds to finance spending, it can cause interest rates to _____ investment.

• A) fall, thereby reducing
• B) fall, thereby stimulating
• C) rise, thereby reducing
• D) rise, thereby stimulating

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Definitions:

Porosity

The measure of void spaces in a material, indicating the capacity to hold fluids.

Groundwater

Water that is found underground in the cracks and spaces in soil, sand, and rocks, forming aquifers.

Cement

A powdery substance made by calcining lime and clay, mixed with water to form mortar or mixed with sand, gravel, and water to make concrete.

Permeability

The ability of a material, especially soil or rock, to allow fluids to pass through it via an interconnected network of pores.