Which of the following situations occurs when government spending replaces spending by the private sector?
A) public-sector inflation
B) phasing out
C) deficit spending
D) crowding out

Question

Quizplus · Accepted Answer

Crowding out occurs when government spending replaces spending by the private sector because it increases the demand for goods and services, causing an increase in interest rates. This rise in interest rates makes borrowing more expensive for businesses and individuals, thus reducing their spending power.

Which of the Following Situations Occurs When Government Spending Replaces