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Which Statement Pertains to the Condition of Crowding Out

Question 83

Multiple Choice

Which statement pertains to the condition of crowding out?


A) Government cuts spending by $300 million,resulting in a decrease in consumption by $500 million.
B) Government cuts taxes,resulting in an increase in investment spending by $270 million.
C) Government increases spending by $300 million on new highway construction,resulting in an increase in consumption by $500 million.
D) Government raises taxes by $300 million to finance new spending on highway construction,resulting in a decrease in investment spending by $270 million.

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