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What Is the "Crowding Out" Effect

Question 52

Multiple Choice

What is the "crowding out" effect?


A) Consumption spending is reduced because of spending on capital
B) Capital spending is reduced because people purchase great quantities of consumer goods
C) Private investment is reduced because government borrowing diverts dollars away
D) Government spending creates a larger demand for capital goods
E) Savings is insufficient to support the level of capital investment in the economy

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