Crowding Out Is Caused by a _____

question 182

Multiple Choice

Crowding out is caused by a _____

• A) reduction in government purchases of goods and services.
• B) reduction in the value of the multiplier used for government purchases of goods and services by increasing the interest rate.
• C) reduction in the value of the multiplier used for government purchases of goods and services by increasing the marginal propensity to consume.
• D) reduction in the value of the multiplier used for government purchases of goods and services by decreasing the marginal propensity to consume.
• E) reduction in the imports of goods and services.

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Definitions:

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.

Marginal Productivity

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.

Income Distribution

The way in which total income is shared among the population or different groups within society.