The Crowding-Out Effect Suggests That

question 198

Multiple Choice

The crowding-out effect suggests that

• A) tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
• B) government borrowing to finance the public debt increases the real interest rate and reduces private investment.
• C) it is very difficult to have excessive aggregate spending in a capitalist economy.
• D) consumer and investment spending always vary inversely.

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Definitions:

Shoreline Glacier

A glacier that extends to the sea at its terminus, often calving icebergs into the water.

Glaciers

Large, slow-moving masses of ice that form from the accumulation and compaction of snow on mountains or near the poles.

Smooth Troughs

Gently sloping depressions or valleys often found on the ocean floor, formed by sedimentation or tectonic activities.

Marine Sediments

Particles of organic and inorganic matter that accumulate in a loose, unconsolidated form on the ocean floor.