The Crowding-Out Effect Refers to Which of the Following

question 151

Multiple Choice

The crowding-out effect refers to which of the following?

• A) reductions in aggregate demand that occur as the government enacts a fiscal policy that is intended to eliminate an inflationary gap
• B) price increases that result in less purchasing power for consumers
• C) increases in consumption spending that leave fewer resources available for the economy to use to create capital
• D) reductions in private investment spending that offset increases in other spending

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