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 interest rate rises.
D)the interest rate falls.

Question

Quizplus · Accepted Answer

A direct expenditure offset occurs when government spending in a particular area competes with the private sector, causing private investment to decrease. This can happen, for example, when the government puts a lot of money into infrastructure projects, which draws resources away from private sector investments. Increased government military spending or changes in interest rates do not necessarily lead to direct expenditure offsets.

By Definition, a Direct Expenditure Offset Will Occur Whenever