The Crowding-Out Effect Suggests That

question 181

Multiple Choice

The crowding-out effect suggests that

• A)tax increases are paid primarily out of saving and therefore are not an effective fiscal device.
• B)government borrowing to finance the public debt increases the real interest rate and reduces private investment.
• C)it is very difficult to have excessive aggregate spending in a capitalist economy.
• D)consumer and investment spending always vary inversely.

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Definitions:

Abduction/Adduction

Movements that refer to the motion of a limb away from or towards the central axis of the body.

Depression/Elevation

Movements referring to the lowering (depression) and raising (elevation) of body parts, like the jaw or shoulders.

Opposition

The movement or capability of positioning one's thumb against the fingertips of the same hand, enabling grasping and manipulation of objects.

Pronation

The movement of rotating the forearm or foot so that the palm or sole is facing downwards or backwards.