The Crowding-Out Effect Suggests That

Multiple Choice

The crowding-out effect suggests that

A) restrictive fiscal policy is an effective weapon against inflation.
B) expansionary fiscal policy will be a highly effective weapon for fighting a recessionary downturn
C) a budget surplus will cause the demand for loanable funds to decline, interest rates to rise, and aggregate demand to decrease.
D) budget deficits that lead to higher interest rates reduce private investment spending.