Which of the following is not a form of crowding out?
A) lower household spending due to higher interest rates
B) lower business spending due to higher interest rates
C) lower net exports due to higher interest rates
D) lower private spending due to higher taxes
E) lower private sector borrowing due to higher interest rates

Question

Quizplus · Accepted Answer

Lower private spending due to higher taxes is not a form of crowding out because it is a direct result of government policy rather than indirect effects on borrowing and interest rates. Crowding out typically refers to the reduction in private sector spending or borrowing that occurs when government borrowing increases, which leads to higher interest rates and reduced access to credit for the private sector.

Which of the Following Is Not a Form of Crowding