If Crowding Out Exists, the Expansionary Effect of Government Spending

question 74

Multiple Choice

If crowding out exists, the expansionary effect of government spending will be

• A) smaller than intended.
• B) negative.
• C) infinite.
• D) larger than intended.
• E) unchanged.

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Definitions:

Net Sales

Total sales revenue minus returns, allowances, and discounts.

Gross Profit

Gross profit refers to the difference between revenue and the cost of goods sold before administrative, overhead, and other expenses.

Receivables Turnover Ratio

A financial metric that measures a company's effectiveness in extending credit and collecting debts, calculated by dividing net credit sales by the average accounts receivable.

Net Sales

The amount of sales revenue remaining after deducting returns, allowances for damaged or missing goods, and discounts.