Multiple Choice
According to the crowding-out effect, how does a decrease in government spending affect the interest rate and investment spending?
A) It increases the interest rate and so increases investment spending.
B) It increases the interest rate and so decreases investment spending.
C) It decreases the interest rate and so increases investment spending.
D) It decreases the interest rate and so decreases investment spending.
Correct Answer:
Verified
Correct Answer:
Verified
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