Advocates of the crowding-out effect maintain that the large budget deficits during the recession of 2008-2009
A)stimulated output and employment, leading to a quicker recovery.
B)will lead to a slower recovery than would have been the case if government borrowing had been more restrained.
C)led to lower interest rates, stimulating private investment and consumption.
D)will lead to lower future taxes and more private spending as the economy recovers.

Question

Quizplus · Accepted Answer

Advocates of the crowding-out effect argue that large budget deficits increase government borrowing, which raises interest rates and reduces private investment, potentially slowing economic recovery.

Advocates of the Crowding-Out Effect Maintain That the Large Budget