An increase in government spending of $100 that results in a decrease of private investment by $100 is an example of
A) a balanced-budget change in fiscal policy.
B) discretionary monetary policy and will increase equilibrium income by $100.
C) the crowding-out effect and will leave equilibrium income unchanged.
D) the circular flow model and will reduce equilibrium income by $100.
E) the crowding-out effect and will increase equilibrium income by $100.
Correct Answer:
Verified
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