Which of the Following Helps Explain How the Multiplier and Crowding-Out

question 98

Multiple Choice

Which of the following helps explain how the multiplier and crowding-out effect impact the size of the shift in aggregate demand from a tax change.

• A)​Tax cuts stimulate consumer spending, earnings and profits rise, which further stimulates consumer spending-the multiplier effect.
• B)​The higher income leads to an increase in the demand for money, which tends to lead to higher interest rates.
• C)​The higher interest rates make borrowing more costly and reduce investment spending-the crowding-out effect.
• D)​All of the above

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Definitions:

Gametic Isolation

A mechanism of reproductive isolation where the gametes (egg and sperm) of different species are unable to fuse or recognize each other, preventing fertilization.

Hybrid Zones

Geographic areas where different species or genetic populations meet and breed, resulting in offspring with mixed characteristics.

Parental Environment

The external conditions and stimuli influenced by parents that contribute to the development and behavior of their offspring.

Rare

Not common or frequent; unusual.