An increase in private sector borrowing (and spending)caused by decreased government borrowing is known as
A)Crowding out.
B)Crowding in.
C)Crowding debt.
D)Debt reduction.

Question

Quizplus · Accepted Answer

When the government borrows less, it frees up resources for the private sector to borrow and spend. This can lead to an increase in private sector activity, known as crowding in. Crowding out, on the other hand, occurs when increased government borrowing causes higher interest rates, which in turn discourage private sector borrowing and spending. Crowding debt and debt reduction are not recognized terms in economics.

An Increase in Private Sector Borrowing (And Spending)caused by Decreased