The Crowding-Out Effect Is

question 19

Multiple Choice

The crowding-out effect is

• A) due to the upward slope of the SRAS when the economy is operating to the right of the LRAS curve.
• B) due to the government being more powerful in the markets when there is an increase in government spending.
• C) a situation in which expansionary fiscal policy leads to a decrease in planned spending in the private sector.
• D) only relevant when an inflationary gap is present.

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