Investment Is "Crowded Out" by an Increase in Government Spending

question 150

Multiple Choice

Investment is "crowded out" by an increase in government spending when

• A) an increase in government spending causes output and prices to rise, which in turn causes interest rates to rise.
• B) an increase in government spending causes output and prices to fall, which in turn causes interest rates to rise.
• C) an increase in government spending causes output and prices to rise, which in turn causes interest rates to fall.
• D) an increase in government spending causes output and prices to fall, which in turn causes interest rates to fall.

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Definitions:

Anabolism

The constructive phase of metabolism in which cells synthesize complex molecules from simpler ones, such as proteins from amino acids.

Structural Proteins

Proteins that provide support and shape to cells and organisms, such as collagen in connective tissues and keratin in hair and nails.

Carbohydrate Utilization

The process by which the body uses carbohydrates as a source of energy, involving digestive breakdown and cellular metabolism.

Polysaccharides

Large carbohydrates formed by the linkage of multiple monosaccharide units, serving as energy reserves or structural components in organisms.