Which of the Following Is an Example of Crowding-Out

question 88

Multiple Choice

Which of the following is an example of crowding-out?

• A) The government invests in education, shifting the long-run aggregate supply curve to the right.
• B) The government lowers taxes, but spending does not increase.
• C) The government buys elementary students new school uniforms, which decreases the amount of private spending on school uniforms.
• D) The government conducts countercyclical policy at the wrong time.
• E) The government spends more than it collects in taxes.

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Definitions:

Static Budget

A fixed budget plan that does not change with actual levels of output or activity achieved during a period.

Patient-Visits

The number of times patients visit a healthcare provider or facility for services in a given period.

Total Variable Cost

The sum of all variable expenses that a company incurs in the process of producing goods or services.

Static Budget

A budget that is created based on a fixed set of assumptions and does not change in response to variations in business activity levels.