The crowding- out effect refers to
A)government spending crowding- out private spending.
B)government investment crowding- out private investment.
C)private investment crowding- out government saving.
D)private saving crowding- out government saving.

Question

Quizplus · Accepted Answer

The crowding-out effect occurs when increased government spending leads to a reduction in private sector investment, as government borrowing can raise interest rates, making it more expensive for the private sector to borrow and invest.

The Crowding- Out Effect Refers to