What type of government spending would be MOST effective in mitigating the crowding-out effect?

Question

Quizplus · Accepted Answer

Education subsidies would be most effective in mitigating the crowding-out effect because they directly contribute to long-term economic growth and productivity. This means that the increased government spending would not necessarily lead to higher interest rates and reduced private investment, as the benefits of education subsidies would offset these negative effects. Transfer payments, while important for social welfare, do not contribute as directly to economic growth and could potentially exacerbate the crowding-out effect. Military spending and increased salaries for presidential staff are also unlikely to mitigate the crowding-out effect.

What Type of Government Spending Would Be MOST Effective in Mitigating