A Smaller Crowding-Out Effect

question 12

Multiple Choice

A smaller crowding-out effect:

• A)increases the magnitude of a given fiscal policy's effect on interest rates and increases the magnitude of its effects on investment.
• B)increases the magnitude of a given fiscal policy's effect on interest rates and decreases the magnitude of its effects on investment.
• C)decreases the magnitude of a given fiscal policy's effect on interest rates and increases the magnitude of its effects on investment.
• D)decreases the magnitude of a given fiscal policy's effect on interest rates and decreases the magnitude of its effects on investment.

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Definitions:

Dividends Declared

Dividends that have been announced by a company's board of directors and are to be paid out to shareholders on a specified date.

Shareholders' Equity

The leftover value in a company's assets once all debts are subtracted, symbolizing the stake of ownership.

Share Capital

The amount of money raised by a company through the sale of shares, representing the funding provided by shareholders.