The crowding in of private investment is more likely to occur,when _____.
A)there is a depreciation of domestic currency
B)interest rates increase significantly
C)a contractionary gap exists in an economy
D)the deficits lower expectations about economic growth
E)an expansionary gap exists in an economy

Question

Quizplus · Accepted Answer

A contractionary gap indicates underutilized resources and lower demand, which can lead to lower interest rates and increased private investment as businesses anticipate future growth.

The Crowding in of Private Investment Is More Likely to Occur,when