According to the Crowding-Out View, Budget Deficits Will

question 5

Multiple Choice

According to the crowding-out view, budget deficits will:

• A) reduce interest rates.
• B) increase interest rates and retard private investment.
• C) reduce the investments of foreigners in the United States.
• D) increase the capital stock available to future generations.

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Definitions:

Marginal Product

The additional output produced by using one more unit of a variable input, holding other inputs constant.

Labor Input

The amount of work or effort provided by employees or workers that is used in the production of goods and services.

Total Product

The total output or production achieved by a firm or economy at a given level of input.

Marginal Product

The additional output produced by adding one more unit of a specific input, keeping all other inputs constant.