The Crowding-Out Effect Suggests That

question 73

Multiple Choice

The crowding-out effect suggests that

• A) expansionary fiscal policy causes inflation.
• B) restrictive fiscal policy is an effective weapon against inflation.
• C) a reduction in private spending that results from higher interest rates caused by a budget deficit will largely offset the expansionary effects of the deficit.
• D) a tax reduction financed by borrowing will increase the disposable income of households and, thereby, lead to a strong expansion in aggregate demand, output, and employment.

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Definitions:

Dawes Severalty Act

A 1887 law aimed at assimilating Native Americans into American society by dividing tribal land into individual plots for ownership.

Reservation Policy

A policy pertaining to the designation of specific lands for indigenous peoples, often characterized by forced relocations and aimed at assimilating indigenous populations into mainstream society.

Cattle Ranching

The business of raising and managing cattle for meat, milk, and other products, typically conducted on large expanses of land.

Cattle Industry

A sector of agriculture focused on the raising, breeding, and marketing of cattle for meat, dairy products, and other by-products.