Recall Application 3, "Increasing Health-Care Expenditures and Crowding Out," to answer the following questions:
-According to the application, as individuals increase spending on health- care:
A) investment spending increases causing a rise in living standards in the long- run.
B) investment spending decreases causing a decline in living standards in the long- run.
C) government spending decreases causing a decline in living standards in the long- run.
D) government spending increases further causing a rise in living standards in the long- run.

Question

Quizplus · Accepted Answer

According to the application, as individuals increase spending on health-care, investment spending decreases causing a decline in living standards in the long- run. This is because health-care expenditures crowd out investment spending, which is necessary for economic growth and an increase in living standards.

Recall Application 3, "Increasing Health-Care Expenditures and Crowding Out," to Answer