The Crowding-Out Effect Is the Tendency for

question 248

Multiple Choice

The crowding-out effect is the tendency for

• A) lower private saving to decrease investment.
• B) higher government budget deficits to increase total savings.
• C) higher government budget deficits to decrease investment.
• D) higher private savings to decrease government budget surpluses.
• E) lower private saving to increase the budget deficit.

Analyze the effects of trade credits on a firm's financial management.

Evaluate the financial risks associated with short-term versus long-term borrowing.

Understand the concepts of policy lags and their types (decision-making lag, implementation lag, effectiveness lag, and recognition lag) in macroeconomic policy.

Distinguish between active and passive policy approaches and their implications on the economy.

---

Definitions:

Cash Proceeds

The amount of money received from transactions such as sales, financing, or the sale of assets.

Amortization

Amortization is the process of spreading the cost of an intangible asset over its useful life, similar to depreciation but for non-physical assets.

Gain

The financial benefit that occurs when the selling price of an asset exceeds its purchase price or carrying value.