Which of the following best describes crowding in?
A) when current budget deficits allow for future fiscal policy initiatives
B) the potential for government spending to stimulate private investment in an otherwise dead economy
C) the displacement of interest-sensitive private investment that occurs when higher government deficits drive up market interest rates
D) when budget deficits help to increase tax revenues

Question

Which of the following best describes crowding in?  
A) when current budget deficits allow for future fiscal policy initiatives 
B) the potential for government spending to stimulate private investment in an otherwise dead economy 
C) the displacement of interest-sensitive private investment that occurs when higher government deficits drive up market interest rates 
D) when budget deficits help to increase tax revenues

Quizplus · Accepted Answer

Crowding in refers to the situation where increased government spending leads to an increase in private sector investment, often by stimulating economic activity and improving investor confidence.

Which of the Following Best Describes Crowding In