The following is an investment schedule. Investment spending is in billions of dollars. Refer to the data in the table above. When the government runs a budget deficit and issues more Treasury securities, crowding out would occur if:

Question

The following is an investment schedule. Investment spending is in billions of dollars.  Refer to the data in the table above. When the government runs a budget deficit and issues more Treasury securities, crowding out would occur if:

Quizplus · Accepted Answer

Crowding out occurs when the government borrows more, leading to an increase in interest rates. When interest rates rise, private investors may be discouraged from borrowing or investing, causing a decrease in investment spending. Therefore, if the interest rate rises, crowding out would occur.

The Following Is an Investment Schedule