Which of the following is an example of crowding out?

Question

Quizplus · Accepted Answer

Crowding out occurs when government borrowing leads to an increase in interest rates, which causes a decrease in private investment spending. Option B demonstrates this by showing that a deficit leads to an increase in interest rates, resulting in less investment spending. A decrease in government housing subsidies leading to an increase in private spending on housing (option D) is an example of the opposite of crowding out, which is crowding in.

Which of the Following Is an Example of Crowding Out