The Crowding-Out Effect

question 366

Multiple Choice

The crowding-out effect

• A) replaces some private investment with government spending.
• B) increases the value of the spending multiplier.
• C) is a big problem during recessions.
• D) improves the efficacy of discretionary fiscal policy.

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Definitions:

Debt Repayment

The process of paying back borrowed money to lenders, either in periodic installments or a lump sum.

Equity Securities

Financial instruments indicating ownership in a company, such as stocks.

Fundamental Analysis

An investment evaluation method that examines macroeconomic, sectoral, and company-specific factors to estimate a security's intrinsic value.

Financial Drivers

Key factors that influence a company's financial performance, including revenue growth, cost control, asset utilization, and market positioning.