Ceteris paribus,which of the following is true about the concept of crowding out?

Question

Quizplus · Accepted Answer

Crowding out occurs when government borrowing reduces the amount of funds available for private investment, leading to a decrease in private investment and, as a result, a reduction in the private sector's ability to raise the level of output. Option A and B are incorrect because crowding out does not increase or have no effect on the private sector's ability to raise the level of output. Option D is incorrect because crowding out can occur through both spending increases and tax increases, but it is not necessary that the two occur together.

Ceteris Paribus,which of the Following Is True About the Concept