If the Government Increases Its Spending,financing Methods That Can Cause

question 227

Multiple Choice

If the government increases its spending,financing methods that can cause crowding out include:

• A) raising taxes only.
• B) selling bonds only.
• C) both raising taxes and selling bonds.
• D) neither raising taxes nor selling bonds.

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Definitions:

Utility-Maximizing

The economic principle that assumes individuals seek to achieve the highest level of satisfaction or utility from their consumption decisions.

Marginal Utility

The added pleasure or benefit received from consuming an additional unit of a good or service.

Money Income

The total amount of monetary earnings received by an individual or household, including wages, salaries, and other forms of income.

Satisfaction Maximization

The process of optimizing decisions or actions to achieve the highest level of satisfaction or utility.