If a Federal Budget Deficit Causes Crowding Out

question 128

Multiple Choice

If a federal budget deficit causes crowding out,

• A)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because bondholders' saving declines
• B)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment declines
• C)interest rates fall,reducing the burden of the debt
• D)interest rates fall,bringing the current deficit back down
• E)interest rates fall,so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit

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Definitions:

Proximity

The physical closeness or distance between two points or objects, often influencing the relationship or interaction between them.

Similarity

The state or fact of being alike or having common features, which can lead to the grouping of objects or ideas in cognitive processes.

Physical Attractiveness

The degree to which a person's physical features are considered aesthetically pleasing or beautiful by others.

Stanford Prison Experiment

A 1971 psychological study of the human response to captivity, in which participants were randomly assigned roles of prisoners or guards.