According to the Crowding-Out Effect, If the Government Sells Bonds

question 47

Multiple Choice

According to the crowding-out effect, if the government sells bonds to finance spending, _____ can eventually fall.

• A) consumption and government expenditures
• B) government expenditures and investment
• C) consumption and investment
• D) exports and investment

---

Definitions:

Comparability Problems

Issues that arise when attempting to compare financial information due to differences in accounting policies or standards.

Inflation

The velocity at which the aggregate pricing for goods and services goes up, undermining the ability to buy.

Return On Sales Ratio

A financial metric measuring the efficiency of a company in generating profit from its sales, calculated by dividing operating profit by total sales.

Financial Statements

Records presenting a snapshot of a business's financial health, encompassing the balance sheet, income statement, and cash flow statement.