Which Component of Aggregate Expenditure Is Most Subject to Crowding

question 102

Multiple Choice

Which component of aggregate expenditure is most subject to crowding out?

• A)consumption expenditures
• B)investment spending
• C)U.S.imports
• D)government purchases of goods and services
• E)saving

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Definitions:

Net Exports

The value of a country's total exports minus the value of its total imports. It is a measure of a nation's foreign trade balance.

Net Capital Outflow

The net flow of funds used for investments in foreign assets by a country minus the flow of investment funds into the country from abroad within a specified timeframe.

Foreign Assets

Investments or ownerships in enterprises, securities, or properties located outside the investor's domestic country.

Real Exchange Rate

The rate at which two currencies can be exchanged, adjusted for their countries' respective inflation rates, to purchase an equivalent quantity of goods and services.