By definition, a direct expenditure offset will occur whenever
A) the government increases spending in an area that competes with the private sector.
B) the government increases spending for the military.
C) the government increases spending to stimulate consumer spending.
D) the interest rate raises to offset the effects of fiscal policy.

Question

Quizplus · Accepted Answer

A direct expenditure offset occurs when the government increases spending in an area that competes with the private sector, which can lead to a decrease in private investment, job creation, and economic growth. This is because the government's increased spending may crowd out private investment by increasing demand for resources and driving up prices. As a result, businesses may become less willing to invest in new projects and hire additional workers, which can offset the intended benefits of the government's spending.

By Definition, a Direct Expenditure Offset Will Occur Whenever