The tendency for increases in government spending to cause reductions in private investment spending is:
A) discretionary fiscal policy
B) fiscal drag
C) bracket creep
D) the crowding- out effect

Question

Quizplus · Accepted Answer

The crowding-out effect refers to the situation where increased government spending leads to higher interest rates, which in turn reduces private investment spending.

The Tendency for Increases in Government Spending to Cause Reductions