1) Crowding out occurs when a) expansionary fiscal policy dampens spending in th

Question

1) Crowding out occurs when a) expansionary fiscal policy dampens spending in the private sector. b) contractionary fiscal policy results in a higher price level. c) contractionary fiscal policy results in a lower price level. d) the aggregate supply curve is horizontal. 2) Contractionary fiscal policy is implemented through a) changes in job training. b) changes in interest rates. c) tax increases or cuts in government spending. d) tax cuts or increases in government spending. 3) Investment is a) goods bought by households. b) the production of goods for immediate satisfaction. c) spending by businesses on equipment which can be used to produce goods and services in the future. d) the purchase of stocks and mutual funds.

Explanation / Answer

1 a) expansionary fiscal policy dampens spending in the private sector. 2 c) tax increases or cuts in government spending 3 c) spending by businesses on equipment which can be used to produce goods and services in the future.

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