"Crowding-Out" Refers to the Process by Which

question 108

Multiple Choice

"Crowding-out" refers to the process by which

• A)high consumption leads to low saving and investment.
• B)the Fed prevents "runs" on banks.
• C)Fed sales of bonds reduce the ability of corporations to buy bonds.
• D)increased government spending raises interest rates, thus lowering investment spending.

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Definitions:

Market Risk

The risk of losses in investments due to market variables, such as changes in interest rates, currency exchange rates, or stock market fluctuations.

Expected Rate Of Return

The profit or loss an investor anticipates on an investment, expressed as a percentage of the investment's initial cost.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's assets and earnings.

CAPM

The Capital Asset Pricing Model is a framework that explains the connection between the expected return on assets, especially stocks, and their systematic risk.