A Concern About Crowding Out Caused by Increased Government Borrowing

question 42

Multiple Choice

A concern about crowding out caused by increased government borrowing is that:

• A) interest rates on private borrowing fall.
• B) lower rates of economic growth can result from a decline in business investment spending.
• C) the federal government may default on its loans.
• D) foreign lenders find it less attractive to help finance federal deficits.

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Definitions:

Correlation

A statistical measure that indicates the degree to which two variables fluctuate together, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).

Variance

A statistical measure that represents the dispersion or spread of a set of data points around their mean value.

Coefficient of Determination

A statistical measure that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

Correlation

A statistical measure that expresses the extent to which two variables change together, ranging from -1 to 1.