A Practical Implication of the Crowding-Out Effect Is That It

question 12

Multiple Choice

A practical implication of the crowding-out effect is that it

• A) makes contractionary fiscal policy more effective than expansionary fiscal policy.
• B) argues for a larger role of the government in fighting recessions.
• C) makes expansionary fiscal policy less effective.
• D) increases the size of the spending multiplier.

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Definitions:

Expected

Refers to the predicted outcome or value in probability and statistics, often based on theoretical or historical data.

Nonparametric Statistics

Distribution-free statistics that do not require the same assumptions as do parametric statistics.

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