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. is crowding out a major concern when actual output is below potential output? why? crowding out is a major concern, because the goal is always to increase investment spending. is not a major concern, because the fed will likely lower the real interest rate when actual output is far below potential. is a major concern, because the crowding out effect will outweigh the increase in government spending. is not a major concern, because the fed will likely raise the real interest rate when actual output is above potential output.

Respuesta :

When the government becomes more active in one area of the market economy at the expense of other areas of the market, this is known as "crowding out."

What do potential output and actual output mean?

Potential output is the amount of goods and services that could be produced if the economy were to function at its maximum sustainable employment level, with unemployment at its natural rate. 1. As a result, actual output may exceed or fall short of potential output. In contrast to current GDP, which we directly witness, potential GDP must be estimated.

How are possible outputs chosen?

To forecast potential output, it uses a model that connects gains in three factor inputs—capital, labor, and technological advancement—to actual GDP growth. Using the CBO method, non-farm businesses and the government

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