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What Impact Does a Larger Crowding-Out Effect Have on the Magnitude

Question 130

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What impact does a larger crowding-out effect have on the magnitude of a given fiscal policy's effect on real output in the short run and investment?


A) It increases the magnitude of a given fiscal policy's effect on real output in the short run and increases the magnitude of its effects on investment.
B) It increases the magnitude of a given fiscal policy's effect on real output in the short run and decreases the magnitude of its effects on investment.
C) It decreases the magnitude of a given fiscal policy's effect on real output in the short run and increases the magnitude of its effects on investment.
D) It decreases the magnitude of a given fiscal policy's effect on real output in the short run and decreases the magnitude of its effects on investment.

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