The Crowding-Out Effect Refers to the Situation Where

question 8

Multiple Choice

The crowding-out effect refers to the situation where

• A)foreign spending is favored over domestic spending.
• B)government borrowing reduces private sector borrowing and spending.
• C)the United States Treasury prints new money that the government uses to force increases in private investment.
• D)the creation of large amounts of money to finance government borrowing produces an inflation that forces private spending to decrease.

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Definitions:

General Partner

An owner of a partnership who has unlimited liability and is actively involved in the management of the business.