Multiple Choice
The term crowding-out effect refers to
A) the reduction in aggregate supply that results when a monetary expansion causes the interest rate to decrease.
B) the reduction in aggregate demand that results when a monetary expansion causes the interest rate to decrease.
C) the reduction in aggregate demand that results when a fiscal expansion causes the interest rate to increase.
D) the reduction in aggregate demand that results when a decrease in government spending or an increase in taxes causes the interest rate to increase.
Correct Answer:
Verified
Correct Answer:
Verified
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