The Strict Crowding-Out Argument Relies on the Assumption That

Multiple Choice

The strict crowding-out argument relies on the assumption that

A) the government must raise taxes to pay for spending, and the tax increase crowds out the stimulative effect of increased spending.
B) the total flow of saving is a fixed amount.
C) investment is invariant to interest rates, but very dependent on aggregate spending.
D) consumption will rise to absorb most of an increase in income, and investment will accordingly fall.