A Smaller Crowding-Out Effect

question 100

Multiple Choice

A smaller crowding-out effect:

• A)increases the magnitude of a given fiscal policy's effect on real output in the short run and increases the magnitude of its effects on net exports.
• B)increases the magnitude of a given fiscal policy's effect on real output in the short run and decreases the magnitude of its effects on net exports.
• C)decreases the magnitude of a given fiscal policy's effect on real output in the short run and increases the magnitude of its effects on net exports.
• D)decreases the magnitude of a given fiscal policy's effect on real output in the short run and decreases the magnitude of its effects on net exports.

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Definitions:

Direct Expenses

Expenses directly linked to the creation of certain products or services, including labor and raw materials.

Direct Expense

Expenses that can be directly traced to a specific cost object, such as a product or a department, including materials and labor directly involved in production.

Indirect Expense

Costs that are not directly tied to the production of goods or services, such as utilities, rent, and administrative salaries.

Direct Expense

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.