The Crowding-Out Effect Stresses That

question 113

Multiple Choice

The crowding-out effect stresses that

• A) an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions.
• B) an increase in taxes will restrain aggregate demand and, thereby, help to control inflation.
• C) additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.
• D) a budget deficit is a highly effective tool with which to combat recessions.
• E) both a and d are correct.

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Definitions:

U.S. Businesses

Companies operating within the United States, subject to U.S. business laws, regulations, and economic policies.

Union Position

The stance or perspective maintained by a labor union on various issues, including wages, working conditions, and policies affecting its members.

Income Inequality

The unequal distribution of income within a population, leading to disparities in wealth and living standards among different socioeconomic groups.

Labor Movement

A collective organization of working people that seeks to improve wages, working conditions, and workers' rights through various forms of protest and negotiation.