Which of the Following Sequences Best Represents the Crowding-Out Effect

question 26

Multiple Choice

Which of the following sequences best represents the crowding-out effect?

• A)government purchases ↑ ⇒ GDP ↑ ⇒ supply of money ↓ ⇒ equilibrium interest rate ↑ ⇒ quantity of goods and services demanded ↓
• B)government purchases ↓ ⇒ GDP ↓ ⇒ demand for money ↓ ⇒ equilibrium interest rate ↓ ⇒ quantity of goods and services demanded ↓
• C)government purchases ↑ ⇒ GDP ↑ ⇒ demand for money ↑ ⇒ equilibrium interest rate ↑ ⇒ quantity of goods and services demanded ↓
• D)taxes ↑ ⇒ GDP ↓ ⇒ demand for money ↓ ⇒ equilibrium interest rate ↑ ⇒ quantity of goods and services demanded ↓

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Definitions:

Exposed Rocks

Rocks that are visible on the Earth's surface without being covered by soil, vegetation, or other materials.

Accreted Terranes

Pieces of the Earth's crust that have been added to a continent due to plate tectonic forces.

Sedimentary Rocks

Rocks created through the gathering or depositing of organic or mineral particles on the Earth's surface, which are then compacted and cemented together.

Volcanic Rocks

Igneous rocks that form from the cooling and solidification of magma or lava at the surface of the earth or within its atmosphere.