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:

Transactional Model

A theoretical framework positing that development results from the dynamic and reciprocal interaction between an individual and their environment.

Restitution

The act of making amends or compensating for loss, damage, or injury caused.

Blended Family

A family structure resulting from the marriage or union of individuals who have children from previous relationships, creating a new, integrated family unit.

Moral Development

The process by which individuals develop attitudes and behaviors toward others based on social norms, cultural practices, and personal beliefs regarding what is right and wrong.