The "Crowding Out" Effect Refers To

question 18

Multiple Choice

The "crowding out" effect refers to:

• A)the increase in domestic investment by foreigners,leaving little investment choice for domestic investors.
• B)the reduction in the interest rate caused by governments running a deficit.
• C)the reduction in domestic investment caused by governments running a deficit.
• D)the irrational exuberance of the market reducing the number of rational investments available.

---

Definitions:

General Journal

A bookkeeping ledger that records each financial transaction of a company in chronological order.

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenue; often referred to as the bottom line.

Revenue and Expense Account Balances

The amounts recorded in accounts tracking the income earned and expenses incurred by a business over a period of time.