The Crowding-Out Effect Is Likely to Be Greater When the

question 241

Multiple Choice

The crowding-out effect is likely to be greater when the

• A)economy is in a serious recession.
• B)government is incurring surpluses,rather than deficits.
• C)economy is at full employment.
• D)the unemployment rate is rising.

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Definitions:

Equity Financed

The method of raising capital through the sale of shares in a company.

Retained Earnings

The portion of a company’s profit that is held back and not distributed to shareholders as dividends, to be reinvested in the business.

EBIT

Earnings Before Interest and Taxes - an indicator of a company's profitability that calculates income without tax expenses and interest expenses.

Straight Line

A method of allocating the cost of a tangible asset over its useful life in equal installments.