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.

---

Definitions:

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Per Unit Basis

A method of expressing costs, pricing, or other financial measures on a per single unit of product or service basis.

Indirect Costs

Expenses not directly tied to a specific product or service, such as overheads, that are necessary for running a business.

Variable Costs

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor.