Assume That If There Was No Crowding-Out, an Increase in Government

question 158

Multiple Choice

Assume that if there was no crowding-out, an increase in government spending would increase GDP by $100 billion. On the other hand, if there had been full crowding-out, then GDP would have:

• A) Increased by more than $100 billion
• B) Increased by less than $100 billion
• C) Increased by $100 billion
• D) Not increased

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Definitions:

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value.

Physical Capital

Tangible assets used in the production of goods and services, such as machinery and buildings.

Generates Output

The process of producing or delivering a result, product, or service from a set of inputs or processes.

Undertaking Project

The process of planning, executing, and completing a project with specific goals and objectives.