Crowding out occurs when the government
A)Increases taxes,thus causing a decrease in consumption.
B)Issues debt,thus making it more difficult for the private sector to issue debt.
C)Prints money,which displaces currency.

Question

Quizplus · Accepted Answer

Crowding out occurs when the government issues debt, which increases interest rates and makes it more difficult for the private sector to issue debt. This can result in a decrease in private investment and consumption as they become more expensive. The other choices, increasing taxes and printing money, may have their own impacts on the economy but do not directly lead to crowding out.

Crowding Out Occurs When the Government