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When (If at All)can the Crowding-Out Effect Be Prevented

Question 52

Multiple Choice

When (if at all) can the crowding-out effect be prevented?


A) when the Fed decreases the money supply to accommodate the expansionary fiscal policy
B) when the real money supply is held constant
C) when the real balance effect is working
D) when the Fed allows the real money supply to increase sufficiently to keep the interest rate from rising

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