The "Crowding Out" Effect Suggests That

question 198

Multiple Choice

The "crowding out" effect suggests that:

• A)government spending is increasing at the expense of private investment.
• B)imports are replacing domestic production.
• C)private investment is increasing at the expense of government spending.
• D)consumption is increasing at the expense of investment.

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Definitions:

Income-Consumption Curve

Curve tracing the utility-maximizing combinations of two goods as a consumer’s income changes.

Utility-Maximizing

A principle or strategy of consumers making choices to achieve the highest overall level of satisfaction or utility from their available resources.

Inferior Good

An inferior good is a type of good for which demand decreases as the income of the individual increases, in contrast to a normal good.

Rental Housing

Properties available for rent to provide accommodation, usually on a monthly or yearly lease agreement.