What explains why Argentina had a greater than 100% crowding out during the 1999 to 2002 period?
A) The government accidentally contracted expenditure instead of expanding it.
B) uncertainty and pessimism
C) implementation lags
D) recognition lags

Question

Quizplus · Accepted Answer

Uncertainty and pessimism led to a decrease in private investment, causing interest rates to rise and crowding out private investment even further, ultimately resulting in a total crowding out of more than 100%.

What Explains Why Argentina Had a Greater Than 100% Crowding