When Consumption and Investment Is Reduced Because of the Higher

question 77

Multiple Choice

When consumption and investment is reduced because of the higher interest rates induced by the government expansionary fiscal policy,the effect is called

• A)the crowding-in effect.
• B)the crowding-out effect.
• C)the multiplier effect.
• D)the budget effect.

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Definitions:

Stock Split

A corporate action that increases the number of shares outstanding by dividing each share, which typically reduces the share price.

Par Value

The face value of a bond or the stated value of a share of stock at the time it is issued, typically used in accounting and finance.

Legal Entity

A legal entity is an organization that has legal rights and obligations, including the ability to enter into contracts and loans, sue and be sued, and is required to pay taxes.

Authorized Stock

The upper limit of shares a corporation is allowed to issue, according to its founding documents.