The crowding-out effect is the tendency for
A)higher government budget deficits to increase total savings.
B)higher private savings to decrease government budget surpluses.
C)lower private saving to decrease investment.
D)higher government budget deficits to decrease investment.
E)lower private saving to increase the budget deficit.

Question

Quizplus · Accepted Answer

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

The Crowding-Out Effect Is the Tendency for