The Crowding-Out Effect Refers to Which of the Following

question 130

Multiple Choice

The crowding-out effect refers to which of the following?

• A)reductions in aggregate demand that occur as the government enacts a fiscal policy that is intended to eliminate an inflationary gap
• B)price increases that result in less purchasing power for consumers
• C)increases in consumption spending that leave fewer resources available for the economy to use to create capital
• D)reductions in private investment spending that offset increases in government purchase of investment goods because of the way the government purchases are financed

Understand the role of variable and fixed costs in decision-making.

Apply activity-based costing to calculate overhead and its impact on pricing.

Interpret financial data to make pricing decisions.

Estimate the impact of different pricing strategies on profit and cost management.

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Definitions:

Skimming Pricing Policy

A pricing strategy where a high price is set for a new product to maximize profits from market segments willing to pay more.

High Quality

Describes products or services that meet or exceed consumer expectations and standards in performance, durability, and satisfaction.

Price-sensitive

Referring to the characteristic of consumers whose buying decisions are greatly influenced by the price of a product or service.

Price Level

The average of current prices across the entire spectrum of goods and services in an economy, reflecting inflation or deflation.