The Crowding-Out Effect Stresses That

question 113

Multiple Choice

The crowding-out effect stresses that

• A) an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions.
• B) an increase in taxes will restrain aggregate demand and, thereby, help to control inflation.
• C) additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.
• D) a budget deficit is a highly effective tool with which to combat recessions.
• E) both a and d are correct.

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Definitions:

Informal Economy

The informal economy comprises economic activities that are not regulated by the government and are typically not included in a country's gross national product or gross domestic product.

State Gross National Product

The total monetary value of all goods and services produced over a specific time period within a country's borders, including the net income from foreign investments.

Industrial Food Production

The large-scale manufacturing of food products involving standardized and efficient methods, typically involving heavy use of chemical inputs and automation.

Mass Marketing

A strategy that involves targeting a large, broad audience with a single marketing message, often through mediums like television, radio, or online platforms.