Which of the following would occur if the federal government decided to use a budget surplus to reduce the existing debt?
A)Crowding out and public sector output would increase.
B)Crowding out and public sector output would decrease.
C)Crowding in and private sector output would increase.
D)Crowding in and private sector output would decrease.

Question

Quizplus · Accepted Answer

Using a budget surplus to reduce debt can lead to "crowding in," where reduced government borrowing lowers interest rates, encouraging private investment and increasing private sector output.

Which of the Following Would Occur If the Federal Government