The Crowding-Out Effect Is

question 47

Multiple Choice

The crowding-out effect is

• A)due to the upward slope of the SRAS when the economy is operating to the right of the LRAS curve.
• B)due to the government being more powerful in the markets when there is an increase in government spending.
• C)a situation in which expansionary fiscal policy leads to a decrease in planned real investment or planned real consumption in the private sector.
• D)only relevant when an inflationary gap is present.

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Definitions:

Subscription Price

The amount a subscriber pays to purchase a new issue of securities.

Market Price

The current offer price at which one can engage in buying or selling an asset or service.

Prospectus

Legal document describing details of the issuing corporation and the proposed offering to potential investors.

Dutch Auction

An auction in which the auctioneer starts with a high asking price which is lowered until some participant is willing to accept the auctioneer's price.