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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