Suppose that the U.S. has an open economy and is currently at full employment. When the country ends its war in Afghanistan and cuts military spending, crowding in will take the form of:

Question

Quizplus · Accepted Answer

When military spending is cut, resources are freed up, leading to lower interest rates and increased availability of funds. This can result in increased investment, consumption, and net exports, as all sectors can benefit from the reduced government borrowing.

Suppose That the U