The Crowding-Out Effect Implies That

question 82

Multiple Choice

The crowding-out effect implies that:

• A)​increases in government purchases will lower interest rates and stimulate investment spending.
• B)​higher taxes reduce both consumption and saving.
• C)​fiscal policy effects on interest rates will be offset by monetary policy.
• D)​increases in government purchases increase income and the demand for loanable funds which will choke off some private spending.