A Crowding-In Effect Occurs

question 134

Multiple Choice

A crowding-in effect occurs

• A)When an increase in government spending leads to an increase in savings.
• B)When increased government borrowing reduces the quantity of funds that businesses can borrow.
• C)That increases investment each time government spending increases.
• D)When the increase in GDP caused by the increased government spending makes businesses see more investment projects as profitable.

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Definitions:

Interest Rate

The cost of borrowing money or the reward for saving, typically expressed as a percentage of the principal.

Entrepreneurial Innovation

The process by which an entrepreneur designs, develops, and brings to the market a novel product or service that potentially changes industry patterns or consumer habits.

Subsidize

To provide financial support or assistance, often by the government, to lower the cost of producing goods or services.

Ideas In Motion

The concept of actively pursuing and implementing new ideas and innovations.