1. Crowding out negatively affects the economy by:
decreasing government borrowing.
decreasing consumption.
increasing private borrowing.
reducing private investment spending on physical capital.
2. Businesses will undertake projects if the rate of return is:
positive.
greater than or equal to the interest rate levied on the loan.
greater than 1.
less than the cost of borrowing for the project.
3. A household's wealth is:
what a household earns each period.
what a household saves each period.
the value of a household's accumulated savings.
the value of a household's financial assets.
4. A financial asset is:
a physical asset like a car.
a claim that entitles the owner to future income from the seller.
the value of accumulated savings.
another term for capital.