The Crowding-Out Effect Refers to the Possibility That

question 199

Multiple Choice

The crowding-out effect refers to the possibility that

• A) when used simultaneously, expansionary fiscal and monetary policies are counterproductive.
• B) the asset demand for money varies inversely with the interest rate.
• C) deficit financing will increase the interest rate and reduce investment.
• D) an increase in the supply of money will result in a decline in velocity.

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