1. Which of the situations is an example of the crowding-out effect on investment as it pertains to macroeconomics? - The government of Walla Walla spent $4.3 billion dollars and collected $2.2...

- The government of Walla Walla spent $4.3 billion dollars and collected $2.2 billion dollars in tax revenue.

- Candex, an eyeglass frame company, decides to cut the price on all of its frames to $10, which successfully drives out all other firms from the market.

- The government deficit is at an all-time high in the United States. As such, people begin to save more money in fear that taxes will increase in the future.

- Jack wants to borrow money to create a cowboy-themed inflatable bounce house for kids called "Wild Wild West." However, the government is running a deficit which has increased interest rates so much that Jack can no longer afford to borrow the money.