Question

Which of the situations is an example of the crowding-out effect on investment as it pertains to macroeconomics? The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that taxes will increase in the future. Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However, the government is running a deficit which has increased interest rates so much that Jack can no longer afford to borrow the money. Candex, an eyeglass frame company, decides to cut the price on all of its frames to $10, which successfully drives out all other firms from the market. The government of Walla Walla spent $4.3 billion dollars and collected $2.2 billion dollars in tax revenue.

Answer 1

The answer is "Choice B".

Step-by-step explanation:

Please find the numbering of the question in the attached file.

Jack needed to steal money to create a children's Wild Wild West hillbilly animatronic rewards house. The state has a surplus, that has forced up Jack's already too high rate of return to exploit.

Its consequence for crowdedness is government spending for capital investors. Enhanced public expenditure results in domestic income. Its increase in government income generates an unstable monetary market with the increase in interest rates and holds the demand for money equal to a money supply set by a commercial bank. Increased rate of interest affects manufacturing costs but declines in private sector investment.