What is "Crowding Out" Quiz

Demand of Loanable Funds outward

Deficit spending will cause the ? line to move ? .

Supply of Loanable Funds inward

Deficit spending will cause the ? line to move ? .

decrease

Either way, the interest rate will ? .

sell

Government will now have to ? bonds.

decrease

Higher interest rates will cause the quantity of investment demand funds to ? .

increases cuts (decrease) increase deficit

However, it is assumed that this policy will affect the federal budget. If the government income ? due to tax ? , and expenditures ? , then a budget ? will occur.

spending inward

However, the reduction of ? will cause AD to move ? , but not all the way back to the original, recessionary position.

Aggregate Demand (AD) Aggregate Supply (AS)

If Monetary Policy actions move the ? line, then Fiscal Policy actions will move the ? line.

inward

If a Private Savings (Supply) line is shown on this graph, then deficit spending will move this line ? .

Congress lower increase

If the economy is suffering from a recession, ? will ? taxes or ? government spending, or do both.

The Fed will Buy bonds

If the economy is suffering from a recession, the ? will ? bonds. This will move money from the government to the public.

present future

Keynesians believe this because the ? is more important than the ? .

Money Supply

On the Money Market Graph, show the change by moving the ? line.

tax spend outward

The initial fiscal policy increases in ? and ? will cause AD to move ? .

C G

This policy will increase ? and ? as parts of AD.

decrease

This will ? Ig, as a component of AD.

lower AD

This will create a ? interest rate, therefore helping ?.

Ig

This will improve ? on the Aggregate Model Graph.

Money Demand line

When Congress causes this line to move, it will move ? .

increase

As a result, the interest rate will ? .