A concern about crowding out caused by increased government borrowing is that:

Question

Quizplus · Accepted Answer

Crowding out can occur when the government borrows more, causing a decrease in available funds for businesses and consumers to borrow. This decrease in borrowing can result in a decline in business investment spending, leading to lower rates of economic growth. Option A is incorrect as interest rates on private borrowing may actually rise due to increased demand for funds. Option C is unlikely as default is a rare occurrence for the US government. Option D is not always the case as foreign lenders may still find US government bonds attractive due to their perceived safety and stability.

A Concern About Crowding Out Caused by Increased Government Borrowing