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Which of the following is NOT true of the crowding-out effect?

A

If aggregate demand increases, the money demand curve will also increase.

B

If the money demand curve increases, the aggregate demand curve will decrease.

C

If aggregate demand decreases, the money demand curve will increase.

D

Budget deficits will lead to crowding-out.

E

If crowding out occurs, the federal reserve can increase the money supply and lower interest rates to encourage investment.

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