What Type of Government Spending Would Be Most Effective in Mitigating

question 13

Multiple Choice

What type of government spending would be most effective in mitigating the crowding-out effect?

• A) education subsidies
• B) subsidies to private airports
• C) military spending
• D) increased salaries for the presidential staff

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Definitions:

Taxable Income

Income on which tax must be paid; total income minus exemptions and deductions.

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), expressing the percentage of income that goes to taxes.

Depreciable Equipment

Tangible assets used in operations that lose value over time due to wear and tear, which can be written off as an expense for tax purposes over its useful life.

Net Income

The ultimate profit a company makes, determined by taking away all expenses, taxes, and costs from the total income generated.