If Crowding Out Exists, the Expansionary Effect of Government Spending

question 52

Multiple Choice

If crowding out exists, the expansionary effect of government spending will be:

• A)smaller than intended.
• B)negative.
• C)infinite.
• D)larger than intended.
• E)zero.

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Definitions:

Saving and Investment

Refers to the act of setting aside funds for future use and the use of those funds to create assets expected to generate returns over time.

Technological Advance

The development and application of new technologies and methods, improving efficiency, productivity, or creating new products.

Vicious Circle

A complex chain of events that reinforces itself through a feedback loop, often leading to a detrimental situation.

Per Capita Incomes

The mean income received by an individual in a specific region or nation.