What is the "Crowding out" effect?
| A. | Reduction in private consumption or investment that occursbecause of an increase in government spending | |
| B. | When the government spends as much money as it generates inrevenue | |
| C. | How much we are below our deficit per year. | |
| D. | How much more we spend than what we bring in revenue. |
Assuming that this is a closed economy with no crowding outeffect , which of the following best describes the impact that a\$100$100dollar sign, 100 billion increase in government spendingwill have on this economy?
| A. | Aggregate demand and real output will eventually increase byonly \$300$300dollar sign, 300 billion, and the price level willincrease. | |
| B. | Aggregate demand and real output will eventually increase by\$400$400dollar sign, 400 billion, and the price level willdecrease. | |
| C. | Aggregate demand and real output will eventually increase by\$500$500dollar sign, 500 billion, and the price level willincrease. | |
| D. | Aggregate supply and real output will eventually increase byonly \$100$100dollar sign, 100 billion, and the price level willdecrease |
Define Balance Budget;
| A. | How much more we spend than what we bring in. | |
| B. | How much we are below our deficit per year | |
| C. | When the government spends as much money as it generates inrevenue | |
| D. | How much debt we have total |
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