The Crowding-Out Effect Suggests That

question 99

Multiple Choice

The crowding-out effect suggests that

• A) restrictive fiscal policy is an effective weapon against inflation.
• B) expansionary fiscal policy will be a highly effective weapon for fighting a recessionary downturn
• C) a budget surplus will cause the demand for loanable funds to decline, interest rates to rise, and aggregate demand to decrease.
• D) budget deficits that lead to higher interest rates reduce private investment spending.

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Definitions:

Tort

A civil wrong causing harm to someone, for which the injured party can seek legal remedies or damages.

Apparent Authority

A situation where a third party reasonably believes that an agent has the authority to act on behalf of the principal, even if such authority has not been formally granted.

Terminate

To bring an end to something, such as a contract, employment, or operation, either by mutual agreement, fulfillment of terms, or through unilateral action.

Notify

To formally or officially inform someone of something.