According to the Crowding-Out Effect, How Does a Decrease in Government

question 109

Multiple Choice

According to the crowding-out effect, how does a decrease in government spending affect the interest rate and investment spending?

• A) It increases the interest rate and so increases investment spending.
• B) It increases the interest rate and so decreases investment spending.
• C) It decreases the interest rate and so increases investment spending.
• D) It decreases the interest rate and so decreases investment spending.

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Definitions:

Sub-Saharan Africa

The region of Africa located south of the Sahara Desert, characterized by diverse cultures, languages, and economies, facing various development challenges.

Leading Cause

refers to the primary factor or condition that results in a particular outcome or effect, often used in contexts like disease or death.

Death

The end of all vital functions necessary to keep an organism alive.

Haiti

A Caribbean country that shares the island of Hispaniola with the Dominican Republic, known for its vibrant culture and history, including being the first post-colonial independent black-led nation in the world.