When private expenditures decrease as a result of increased government spending, this is known as

a) the crowding out effect

b) government deficit spending

c) the multiplier effect

d) the stabilizer effect

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Related questions

The crowding-out effect of borrowing to finance the increases in government expenditures

a. reduces current spending for private investment.

b. increases the privately owned stock of capital.

c. reduces the economic burden on future generations.

d. increases incentives to innovate.

skychimpanzee517

Assume that the federal government is attempting to counter a negative shock through fiscal policy. The federal government increases government spending by $245 billion. As a result of this policy change, total economic activity has increased by $330 billion. Which of the following is most likely to be true?

A. the government has a lot of debt already and is likely to default

B. the negative shock is likely a real shock

C. the increase in government spending led to a substantial increase in imports

D. the multiplier effect outweighs crowding out