A practical implication of the crowding-out effect is that it

Question

Quizplus · Accepted Answer

The crowding-out effect suggests that government spending can lead to a decrease in private investment and consumption, as the government borrows more money and competes with private borrowers for funds, causing interest rates to rise. This means that expansionary fiscal policy, which involves increasing government spending, will be less effective as it crowds out private spending. The other choices are not directly related to the crowding-out effect.

A Practical Implication of the Crowding-Out Effect Is That It