The crowding-out effect of expansionary fiscal policy suggests that
A)government spending increases at the expense of private investment.
B)imports replace domestic production.
C)private investment increases at the expense of government spending.
D)saving increases at the expense of investment.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy can lead to higher interest rates, which may reduce private investment as government borrowing "crowds out" private sector borrowing.

The Crowding-Out Effect of Expansionary Fiscal Policy Suggests That