Macro Unit 4, Question 15- Crowding Out

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Business, Social Studies
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11th Grade - University
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Hard
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5 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the real interest rate when the government increases its deficit spending?
It fluctuates randomly.
It increases.
It remains unchanged.
It decreases.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does increased government borrowing affect private sector investors?
It crowds them out by making loans more expensive.
It provides them with more opportunities to borrow.
It encourages them to invest more.
It has no effect on their investment decisions.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the example provided, why is the business less likely to take out a loan?
The government is offering grants instead of loans.
The real interest rate has increased due to government borrowing.
The real interest rate has decreased.
The business has enough internal funds.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the main reason the AP test frequently asks about crowding out?
It is a key concept in understanding the loanable funds market and deficit spending.
It is rarely covered in textbooks.
It is a simple concept to understand.
It is a new concept in economics.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why is it important to understand the concept of crowding out?
It is only relevant for small businesses.
It is crucial for understanding government fiscal policies and their impact on private investment.
It is not important for economic studies.
It helps in predicting stock market trends.
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