When Private Expenditures Decrease as a Result of Increased Government

question 10

Multiple Choice

When private expenditures decrease as a result of increased government spending,it is known as

• A)the stabilizer effect.
• B)the crowding out effect.
• C)the multiplier effect.
• D)government deficit spending.

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Definitions:

Central Banks

National banks that provide financial and banking services for a country's government and commercial banking system, mainly responsible for monetary policy.

Fixed Exchange Rate

A rate of exchange that is set in some way and therefore prevented from rising or falling with changes in currency supply and demand.

FX Reserves

Foreign exchange reserves, assets held on reserve by a central bank in foreign currencies, used to back liabilities on their own issued currency as well as to influence monetary policy.

Foreign Investment

The investment of capital by individuals, firms, or governments in business interests located in another country.