The Crowding-Out Effect Arises When

question 92

Multiple Choice

The crowding-out effect arises when:

• A)government borrows in the money market, thus increasing interest rates and net investment spending in the economy.
• B)government borrows in the money market, thus increasing interest rates and decreasing net investment spending.
• C)the progressivity of the tax system increases, thus decreasing interest rates and increasing net investment spending.
• D)the progressivity of the tax system decreases, thus decreasing interest rates and net investment spending.

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Definitions:

Writing Requirement

A legal stipulation that certain contracts or agreements must be documented in writing to be enforceable.

Implied Warranty

A legal assumption in commerce that the goods or services sold meet certain quality standards, even if not explicitly stated by the seller.

Assignment

The transfer of rights, property, or obligations from one party to another.

Consideration

Something of value exchanged between parties to form a binding contract.