The Crowding-Out Effect Implies That Restrictive Fiscal Policy Will

question 144

Multiple Choice

The crowding-out effect implies that restrictive fiscal policy will

• A) increase aggregate demand and employment.
• B) lead to a significant increase in the natural rate of unemployment.
• C) be highly effective against inflation.
• D) reduce real interest rates.

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Definitions:

Population Parameter

A population parameter is a numerical value that characterizes a certain aspect of a population, such as its mean or variance.

Expected Value

The long-term average value of a random variable, representing its mean outcome over an infinite number of trials.

Point Estimate

A single value that serves as the best guess or most likely value for a population parameter based on sample data.

Population Parameter

A numerical value that describes a characteristic of a population, such as mean, standard deviation, proportion, etc., usually estimated through samples.