The Crowding-Out Effect

question 53

Multiple Choice

The crowding-out effect

• A) is a basic tenet of Keynesian analysis.
• B) occurs when people expect prices to rise as a result of stabilization policy and take measures to raise their wages.
• C) asserts that expansionary fiscal policy will bid up interest rates and reduce private spending.
• D) asserts that an increase in aggregate supply will force down price levels and reduce competition for output by households and businesses.
• E) states that increasing the money supply will lower interest rates, making it impossible for some borrowers to obtain adequate funds.

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Definitions:

Still Growing

a phrase indicating ongoing physical, emotional, or intellectual development.

Prefrontal Cortex

The front part of the frontal lobes of the brain, involved in decision making, planning, and moderating social behavior.

Corpus Callosum

Brain area where fibers connect the brain’s left and right hemispheres.

Cerebrum

the largest part of the brain, responsible for higher brain functions such as thought, action, and emotion.