If a Federal Budget Deficit Causes Crowding Out,_____

question 138

Multiple Choice

If a federal budget deficit causes crowding out,_____.

• A)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because the marginal propensity to consume decreases
• B)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment decreases
• C)interest rates fall,reducing the burden of the debt
• D)firms become more willing to invest
• E)interest rates fall,so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit

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Definitions:

Correlation Coefficient

A numerical measure that represents the strength and direction of a relationship between two variables, ranging from -1 to 1.

Placebo Effect

A phenomenon in which a person's condition improves because they believe they are receiving treatment, even though the treatment has no therapeutic value.

Participant Bias

A type of bias that occurs when participants in a study act or respond differently because they know they are being observed.

Double-Blind Experiments

Double-Blind Experiments are studies where neither the participants nor the experimenters know who has been administered the treatment or the placebo, reducing biases.