The Crowding-Out Effect Refers to the Tendency of Expansionary Fiscal

question 92

Multiple Choice

The crowding-out effect refers to the tendency of expansionary fiscal policy to

• A)cause decreases in planned investment or planned consumption in the private sector.
• B)cause households to save less.
• C)replace low skilled labour with higher skilled labour.
• D)cause firms to produce beyond capacity.

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Definitions:

Scarcity

The inability of an economy to generate enough goods and services to satisfy all human wants.

Economic Questions

Fundamental inquiries regarding how societies allocate resources, including what to produce, how to produce, and for whom to produce.

Curbing Pollution

Measures undertaken to reduce or eliminate the release of pollutants into the environment to protect ecological balance and public health.

Regulations

Rules and standards created and enforced by government agencies to control or govern conduct within various sectors, industries, and activities.