The Crowding Out of Private Investment Is Associated with

question 89

Multiple Choice

The crowding out of private investment is associated with

• A)a reduction in profitable investment opportunities due to a recession
• B)increased competition from foreign investors in U.S.markets
• C)higher interest rates resulting from a declining rate of saving
• D)higher interest rates resulting from increased borrowing by the federal government
• E)higher interest rates resulting from restrictive monetary policy

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Definitions:

WACC

Weighted Average Cost of Capital; a method for assessing a firm's capital costs by applying proportional weights to each kind of capital.

Credit Rating

An evaluation of the creditworthiness of an individual or corporation, often expressed as a grade or score, that reflects the likelihood of the entity defaulting on its debts.