The crowding-out effect arises when:
A. the progressivity of the tax system decreases, thus decreasing interest rates and net investment spending.
B. government borrows in the money market, thus increasing interest rates and net investment spending in the economy.
C. the progressivity of the tax system increases, thus decreasing interest rates and increasing net investment spending.
D. government borrows in the money market, thus increasing interest rates and decreasing net investment spending.
Answer: D
You might also like to view...
Which of the following factors is always present in consumer decision making?
A. Taxes B. High prices C. Scarcity D. Changing consumer tastes E. Cost-of-living adjustments to income
Refer to Table 19-8. Suppose that a simple economy produces only four goods and services: sweaters, CDs, sugar, and soft drinks
Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households. Calculate nominal GDP for this simple economy.
An aggregate supply curve that is either horizontal or upward sloping, depending on whether the absolute price level increases as firms produce more output is called:
A) short-run aggregate supply curve. B) long-run aggregate supply curve. C) potential GDP. D) NAIRU.
Bill currently uses his entire budget to purchase 5 cans of Pepsi and 3 hamburgers per week. The price of Pepsi is $1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 4, and his marginal utility from hamburgers is 6
Bill could increase his utility by: A) increasing Pepsi consumption and reducing hamburger consumption. B) increasing hamburger consumption and reducing Pepsi consumption. C) maintaining his current consumption choices. D) We do not have enough information to answer this question.