The crowding-out effect is the tendency for a government budget deficit to raise the and investment. O A. price level; increase O B. real interest rate; decrease C. quantity of output; increase O D. real wage rate; decrease

The crowding-out effect is the tendency for a government budget deficit to raise the and investment. O A. price level; increase O B. real interest rate; decrease C. quantity of output; increase O D. real wage rate; decrease

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The crowding-out effect is the tendency for a government budget deficit to raise the
and
investment.
O A. price level; increase
O B. real interest rate; decrease
O C. quantity of output; increase
O D. real wage rate; decrease
Click to select your answer.
888
:二。
F7
F6

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An expansionary fiscal policy that takes the form of an increase in government purchases carries the possibility that private investment and, as a result, the future growth rate of O a. Is crowded out, potential output is reduced. O b. Rises to an unsustainable level; real GDP is reduced. O c. Increases, net exports increases. O d. Is crowded out; corporate tax revenue is reduced. e Increases, aggregate demand increases.
2
The government might be encouraged to finance its debt through seigniorage because: a. printing money reduces the price level and thus reduces the real value of government debt. O b. seigniorage is widely considered the best solution to huge fiscal problems. O C. None of the other choices are correct. O d. it is easier to print money when the central bank does not accommodate the government's deficit.
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