Crowding Out Occurs Because Expansionary Fiscal Policy

question 62

Multiple Choice

Crowding out occurs because expansionary fiscal policy:

• A) appreciates the exchange rate.
• B) lowers foreign income.
• C) lowers the interest rate.
• D) increases net exports.

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Definitions:

Perpetual inventory system

An inventory management approach where stock levels are updated continuously as transactions occur.

LIFO inventory cost method

An inventory valuation method that assumes the last items acquired are the first to be sold, affecting cost of goods sold and ending inventory.

Cost of merchandise sold

The total cost of acquiring or manufacturing the products that were sold to customers during a period.

Perpetual system

An inventory accounting system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.