Crowding Out Is a Reduction in Private Investment Caused by Government

question 31

Multiple Choice

Crowding out is a reduction in private investment caused by government budget deficits,and may partially offset the expansionary effects of fiscal policy.The exact degree of crowding out depends on all of the following except

• A) how much of the deficit is financed by households, firms, and governments outside of Canada.
• B) how much real interest rates increase.
• C) the level of the marginal corporate income tax rate.
• D) the sensitivity of investment to the real interest rate.

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Definitions:

Coordination

The organized arrangement of elements or efforts in a system or activity to ensure harmonious operation and desired outcomes.

Motion Studies

The systematic study of the human motions used in work activities, aimed at improving efficiency and productivity by reducing unnecessary movements.

Frank and Lillian Gilbreth

Pioneers in the field of industrial engineering, known for their studies in time and motion, and for improving workplace efficiency and productivity.

Incentive Wage Plans

Compensation systems that link a portion of employees' pay to their performance or productivity, aiming to motivate higher levels of output or quality.