Some of the Crowding Out of Private Expenditures May Come

question 97

Multiple Choice

Some of the crowding out of private expenditures may come in the form of

• A)an increase in consumption.
• B)an increase in net exports.
• C)a decrease in taxes.
• D)a decrease in net exports.

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Definitions:

Prices Constant

An assumption in economic analysis that prices remain unchanged over a specific period, allowing for the examination of other variables' effects without price fluctuations.

Diminishing Marginal Rate

The principle that as the quantidade of a variable input increases, with all other inputs fixed, a point will be reached where the additions to output will begin to decrease.

Substitution

The economic principle describing how consumers or producers replace one good or service with another in response to changes in price or other factors.

Substitution Effect

The substitution effect describes a change in consumption patterns due to shifts in relative prices, where consumers prefer cheaper alternatives when the price of a good rises, keeping their utility level constant.