The Crowding-Out Effect Is Caused by

Multiple Choice

The crowding-out effect is caused by

A) an increase in the money supply increases the demand for goods and services, and thus crowds out investment.
B) an increase in government purchases reduces the demand for goods and services, and thus crowds out investment.
C) an increase in consumer income increases the demand for goods and services, and thus crowds out investment.
D) an increase in government purchases increases the demand for goods and services, and thus crowds out investment.