Which Statement Describes the Effect of Crowding Out

question 102

Multiple Choice

Which statement describes the effect of crowding out?

• A) Consumption and investment are indirectly affected by changes in government spending.
• B) Consumption is directly affected by changes in government spending.
• C) Consumption and investment are directly affected by changes in government spending.
• D) Consumption and investment are not affected by changes in government spending.

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Definitions:

Carrying Costs

Expenses incurred by holding inventory over a period, including storage costs, insurance, and opportunity costs.

Credit Policy Effects

The impact of a company's credit policy on its operations, including effects on sales volume, customer relationships, and cash flow.

Cost Factor

A multiplier or rate that helps in estimating the cost of a project, task, or operation based on certain parameters or variables.