According to the Crowding-Out Effect, Expansionary Fiscal Policy Will Lead

question 134

Multiple Choice

According to the crowding-out effect, expansionary fiscal policy will lead to

• A) higher interest rates, an appreciated dollar, and reduced net exports.
• B) higher interest rates, an appreciated dollar, and increased net exports.
• C) reduced interest rates, an appreciated dollar, and reduced net exports.
• D) reduced interest rates, an appreciated dollar, and increased net exports.

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Definitions:

Future Outcomes

Possible events or results that have not yet occurred and may be influenced by current actions or decisions.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess profitability of investments.

Cash Inflows

Money received by a business from its operational, financing, or investing activities.