Recall the Application About the Possibility of Increases in Health-Care

Multiple Choice

Recall the Application about the possibility of increases in health-care expenditures crowding out consumption or investment spending to answer the following question(s) . In 1950, health-care expenditures in the United States were 5.2 percent of GDP; by 2000, this share had risen to 15.4 percent. Driving these increases were several factors: increasing relative prices of health care compared to other goods, a larger population of the elderly, and increased longevity. Since 1950, the average life span has increased by 1.7 years per decade.
-According to the Application, increases in health-care expenditures will have to crowd out some other component of GDP. The preferred outcome stated in the Application is that increased spending on health-care would come at the expense of

A) investment spending.
B) spending on consumer durables or larger houses.
C) spending on non-durables such as food and clothing.
D) spending on services such as higher education.