If Crowding Out Occurs

question 245

Multiple Choice

If crowding out occurs:

• A) increases in consumption are offset by decreases in government spending.
• B) increases in the money supply are offset by dollar outflows in foreign trade.
• C) increases in government spending cause higher interest rates and decreased investment spending.
• D) decreases in government spending cause lower interest rates and decreased investment spending.

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Definitions:

Two-Factor Theory

A theory in psychology proposing that emotional experiences arise from physiological arousal and cognitive labeling of the cause of that arousal.

Passionate Love

An intense emotional state of affection, longing, and sexual attraction between partners.

Just-World Phenomenon

The cognitive bias to believe that the world is fair and people get what they deserve, which can influence judgments and social perceptions.

Social Attraction

The draw or appeal one individual feels towards another, influenced by factors like persona, interests, and physical appearance.