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:

Overcome

To successfully deal with or gain control over something challenging, such as an obstacle or difficulty.

Planned Change

A deliberate effort to improve a business or system through intentional interventions and strategies.

Overwhelmed

A state of feeling unable to cope due to excessive pressures or demands.

System

A set of interacting or interdependent components forming an integrated whole or a set of principles or procedures according to which something is done.