The crowding-out effect refers to the possibility that deﬁcit spending may motivate people to increase
their saving in anticipation of higher future taxes.

Name: The crowding-out effect refers to the possibility that deﬁcit spending may motivate people to increase their saving in anticipation of higher future taxes.
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Question

Quizplus · Accepted Answer

The crowding-out effect refers to the possibility that government spending may crowd out private investment by increasing interest rates, not that it motivates people to save more.

The Crowding-Out Effect Refers to the Possibility That Deﬁcit Spending