In the Extreme Case of a Complete Crowding-Out Effect

question 147

Multiple Choice

In the extreme case of a complete crowding-out effect

• A) an increase in interest rates will stimulate investment spending.
• B) an increase in tax rates will stimulate work effort.
• C) an increase in government spending will not increase aggregate demand.
• D) an increase in government spending will stimulate investment spending.

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Definitions:

Neurotic Need

Excessive, compulsive desires that occur in an individual due to psychological conflicts or anxieties.

Unconscious Forces

The underlying, often hidden, motivations and desires that influence thoughts, feelings, and behaviors, according to psychoanalytic theory.

Situational Variables

External factors or conditions that can influence the outcome of research or the behavior of individuals in a given context.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial stages of human development.