Crowding Out Occurs When Deficit Spending by the Government Forces

question 73

True/False

Crowding out occurs when deficit spending by the government forces private investment spending to contract.

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Definitions:

Principle of Neutrality

The concept that certain measures, such as fiscal policies, should be designed to have a neutral effect on economic choices and competition.

Economic Decisions

Choices made by individuals, businesses, or governments regarding the allocation of scarce resources to satisfy needs and desires.

Excess Burden

The loss of economic efficiency that occurs when a tax or government policy distorts consumer behavior or market outcomes, leading to a decrease in total welfare.

Tax Revenue

The financial gains obtained by governments from tax collection.