In the Mainstream View, the Crowding-Out Effect from the Use

question 223

Multiple Choice

In the mainstream view, the crowding-out effect from the use of fiscal policy is

• A)small, especially during a recession.
• B)large, especially during a recession.
• C)large because the velocity of money is high.
• D)small because the velocity of money is low.

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Definitions:

Competitive Rate

A pricing strategy often used by businesses to match or beat the prices offered by competitors in the market.

Short Run

A period in economics where at least one factor of production is fixed and cannot be altered.

Inputs

Resources such as labor, materials, and capital used in the production process to create goods or services.