Suppose the government increases spending on public education by $700 million and individual spending on private education drops by $700 million.This is an example of
A) incomplete crowding out.
B) complete crowding out.
C) zero crowding out.
D) a and c
E) none of the above

Question

Quizplus · Accepted Answer

Complete crowding out occurs when government spending increases and results in a corresponding decrease in private spending. In this scenario, the increase in public education spending is directly offset by the decrease in private education spending, resulting in no net increase in total education spending. Therefore, this is an example of complete crowding out.

Suppose the Government Increases Spending on Public Education by $700