Did the large U.S.budget deficits in the 1980s "crowd out" investment as some economists had predicted?
A)Yes, investment dropped as predicted.
B)Yes, although investment did not fall nearly as much as some had feared.
C)No, investment was not crowded out, but net exports dropped.
D)No, no crowding out at all occurred.

Question

Quizplus · Accepted Answer

The large U.S. budget deficits in the 1980s did not "crowd out" investment as some economists had predicted. Instead, the deficits were associated with a drop in net exports, indicating that the crowding out effect manifested in the external sector rather than in reduced investment.

Did the Large U