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Crowding out would most likely occur when: A. the Congress enacts budget cuts to balance the budget. B. workers lose jobs as a result of anti-inflationary fiscal policies. C. the federal government engages in bond sales to finance its budget deficit. D. tax receipts rise more slowly than anticipated, resulting in the need to cut government spending.
Fiscal Policy An Increase in Government Spending: Figure 1 Let us examine how an increase in government spending affects the interest rate and the level of income.
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