The Crowding-Out Effect

question 307

Multiple Choice

The crowding-out effect:

• A) replaces some private investment with government spending.
• B) increases the value of the spending multiplier.
• C) is a bigger problem during recessions.
• D) improves the efficacy of discretionary fiscal policy.

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Definitions:

Oral Rehydration Solution

A fluid replacement solution used to prevent and treat dehydration, especially due to diarrhea.

Antidiarrheal Medications

Drugs used to alleviate or prevent diarrhea.

Acute Diarrhea

A sudden onset of frequent, loose, or watery bowel movements that may last a few days and can lead to dehydration.

Rotavirus

A highly contagious virus that causes gastroenteritis, particularly in infants and young children, leading to severe diarrhea and vomiting.