Suppose that government purchases rise by $100 billion and together consumption and investment decline by a total of $80 billion.

This is an example of:

a) complete crowding out.

b) zero crowding out.

c) incomplete crowding out.

d) an activity that shifts the AD curve to the left.

e) b and d

Question

Rivers

Business

12 June, 08:38

Suppose that government purchases rise by $100 billion and together consumption and investment decline by a total of $80 billion.

This is an example of:

a) complete crowding out.

b) zero crowding out.

c) incomplete crowding out.

d) an activity that shifts the AD curve to the left.

e) b and d

+3

Answers (1)

Know the Answer?

Destiney Aguirre · Answer 1

a) complete crowding out.

Explanation:

This is an example of crowding out effect, when government increases it's involvement in a market, such that it reduces private sector investment, it is called crowding out

Suppose that government purchases rise by $100 billion and together consumption and investment decline by a total of $80 billion.This is an example of:a) complete crowding out.b) zero crowding out.c) incomplete crowding out.d) an activity that shifts the AD curve to the left.e) b and d

Suppose that government purchases rise by $100 billion and together consumption and investment decline by a total of $80 billion.

This is an example of:

a) complete crowding out.

b) zero crowding out.

c) incomplete crowding out.

d) an activity that shifts the AD curve to the left.

e) b and d