According to the crowding out effect,if the government sells bonds to finance spending,_____ can eventually fall.

Question

Quizplus · Accepted Answer

The crowding out effect suggests that when the government sells bonds to finance spending, interest rates rise. This increase in interest rates can lead to a decrease in consumption and investment by the private sector, as individuals and firms find it more expensive to borrow money. Therefore, option C is the best answer as it includes both consumption and investment as variables that can be affected by the crowding out effect.

According to the Crowding Out Effect,if the Government Sells Bonds