Which of the Following Best Explains What Is Meant by the Term

question 42

Multiple Choice

Which of the following best explains what is meant by the term crowding out?

• A)An increase in government purchases causes interest rates to rise and results in a decline in investment expenditures.
• B)An increase in government purchases causes interest rates to fall and results in a decline in investment expenditures.
• C)An increase in investment causes interest rates to rise and results in a drop in government purchases.
• D)Increases in consumption expenditures cause interest rates to rise and result in a decline in investment expenditures.
• E)An increase in consumption expenditures causes interest rates to rise and results in a decline in government purchases.