The Crowding-Out Effect of Expansionary Fiscal Policy Suggests That

question 166

Multiple Choice

The crowding-out effect of expansionary fiscal policy suggests that

• A)tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
• B)increases in government spending financed through borrowing will increase the interest rate and thereby reduce investment.
• C)it is very difficult to have excessive aggregate spending in the U.S.economy.
• D)consumer and investment spending always vary inversely.

---

Definitions:

Formal Charges

A bookkeeping tool used in chemistry to account for the distribution of electrons among atoms in a molecule, helping to identify the most stable resonance form.

Nucleophilic Acyl Substitution

A reaction where a nucleophile replaces the leaving group in an acyl compound.

Carbonyl

A functional group consisting of a carbon atom double-bonded to an oxygen atom \(\text{C=O}\).

Leaving Group

An atom or group that departs with a pair of electrons in a chemical reaction, making a bond-breaking step feasible.