When (If at All)can the Crowding-Out Effect Be Prevented

question 52

Multiple Choice

When (if at all) can the crowding-out effect be prevented?

• A)when the Fed decreases the money supply to accommodate the expansionary fiscal policy
• B)when the real money supply is held constant
• C)when the real balance effect is working
• D)when the Fed allows the real money supply to increase sufficiently to keep the interest rate from rising

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