Crowding out is reduction in:
A) private borrowing that is caused by an increase in government borrowing.
B) government borrowing that is caused by an increase in private borrowing.
C) private borrowing that is caused by an increase in corporate borrowing.
D) corporate borrowing that is caused by an increase in private borrowing.

Question

Quizplus · Accepted Answer

Crowding out occurs when an increase in government borrowing reduces the amount of funds available for private borrowing, as the demand for funds increases and interest rates rise. This leads to a decrease in private investment and consumption, and can have a negative impact on economic growth.

Crowding Out Is Reduction In