When Used in Connection with Fiscal Policy, the Term "Crowding

question 85

Multiple Choice

When used in connection with fiscal policy, the term "crowding out" refers to:

• A) the ways that the policy effectively crowds out inflation and unemployment from the economy.
• B) a decrease in government spending, which ends up "crowding out" or decreasing aggregate demand.
• C) tradeoffs among different types of spending in the economy, which results in more government spending having a smaller impact on total spending.
• D) the growth of output as an economy makes full use of its idle resources.

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Definitions:

Commodity X

A placeholder name for a generic commodity or product in economic models or discussions.

Commodity Y

A generic placeholder term used to refer to any tradable item that satisfies wants or needs, but without specifying the item.

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for a different one while keeping their level of satisfaction constant.

Snails

Slow-moving, gastropod mollusks with a spiral shell, some species of which are eaten as delicacy.