When Crowding Out Occurs

question 131

Multiple Choice

When crowding out occurs,

• A)private spending replaces public spending
• B)the dollar typically weakens in foreign exchange markets
• C)public spending replaces private spending
• D)it offsets any gains created from the lower interest rates
• E)none of the above

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Definitions:

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Short-Term Receivables

Assets expected to be turned into cash within a year, such as accounts receivable from sales or services.

Risk Assessment

The process of identifying, analyzing, and evaluating risks associated with the objectives of an organization, essential for informed decision making and risk management.