The Crowding-Out Effect Suggests That

question 38

Multiple Choice

The crowding-out effect suggests that

• A)expansionary fiscal policy causes inflation.
• B)high marginal tax rates crowd out tax deductions.
• C)the demand stimulus effects of a budget deficit will be weak because the borrowing to finance the deficit will lead to higher interest rates.
• D)a budget surplus will cause the economy to slip into a major recession.

Recognize the adoption and implications of an emissions tax by the government.

Compare the effectiveness of taxes and environmental standards in controlling pollution.

Identify the elements and benefits of tradable pollution permits in environmental policy.

Understand the calculation and implications of setting taxes on pollutants for businesses and their effects on the supply of products.

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Definitions:

Total Assets

The sum of all owned resources (current and non-current assets) that a company possesses, which can be found on its balance sheet.

Assets Turnover

A financial ratio that measures the efficiency with which a company uses its assets to generate sales.

Sales

The activities involved in selling products or services to customers, encompassing strategies and processes for identifying customer needs, closing deals, and after-sales support.

Inventories

Quantities of goods or materials on hand or in process of manufacture, storage, or transport.