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:

Uncollectibles

Financial term referring to debts or receivables that are deemed unlikely to be collected and thus written off.

Partial Balance Sheet

A snapshot of a portion of a company's financial position at a specific point in time, focusing on certain assets, liabilities, or equity sections rather than the complete picture.

Aging Process

A method used in accounting to categorize accounts receivable according to the length of time an invoice has been outstanding.

Accounts Receivable

Funds that are expected to be received by a company from its customers who have purchased goods or services on credit, essentially representing a line of credit extended by the business and recorded as an asset.