A Larger Crowding-Out Effect

question 41

Multiple Choice

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

---

Definitions:

Average Variable Costs

The cost per unit of producing each good or service, excluding any fixed costs.

Average Total Costs

The total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Total Variable Costs

The total of all costs that vary with the level of output, including expenses such as raw materials, labor, and utilities that increase as production expands.

Average Variable Cost

A firm’s total variable cost divided by output (the quantity of product produced).