Which of the Following Best Describes the Crowding-Out Effect

question 32

Multiple Choice

Which of the following best describes the crowding-out effect?

• A) An increase in government expenditures will cause taxes to rise, which will reduce both aggregate demand and output.
• B) An increase in borrowing by the government will push interest rates upward, which will lead to a reduction in private spending.
• C) An increase in borrowing by the government will decrease the money supply and, thereby, reduce aggregate demand.
• D) An increase in government expenditures will cause the general level of prices to fall and, thereby, reduce aggregate demand and output.

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Definitions:

Biological Parents

The parents who have conceived and given birth to, or biologically fathered a child, as opposed to adoptive or step-parents.

Fraternal Twins

Siblings born at the same time who are genetically as similar as regular siblings because they come from two different eggs fertilized by two different sperm.

Polygenetic

Relating to the contribution of multiple genes in the determination of a particular trait or characteristic, often resulting in a wide spectrum of possible outcomes.

Intelligence

The ability to acquire and apply knowledge and skills.