The Crowding-In Effect Depends on the Sensitivity of Investment to

question 27

Multiple Choice

The crowding-in effect depends on the sensitivity of investment to

• A)GDP, as does the crowding-out effect.
• B)interest rates, whereas the crowding-out effect depends on the sensitivity of investment to GDP.
• C)interest rates, as does the crowding-out effect.
• D)GDP, whereas the crowding-out effect depends on the sensitivity of investment to interest rates.

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Definitions:

Industry Demand

The total demand for the products of a specific industry, encompassing the collective demand of all consumers for these products.

MR Curve

The Marginal Revenue Curve represents the change in total revenue that results from selling one additional unit of a product or service.

Downward Sloping

A descriptive term for a graph line that shows a decrease in value as it moves from left to right, often used in economics to describe demand curves.

Demand Curve

A graph showing the relationship between the quantity of a commodity demanded and its price.