Evidence from the Great Recession suggests that the crowding out effect:
A) was minimal at that time.
B) had a very detrimental effect on private savings.
C) can be quite large in times of recession, and is reinforced with recent research from 2008.
D) may hold, although the evidence is somewhat contradictory.

Question

Quizplus · Accepted Answer

During the Great Recession, the crowding out effect was minimal because interest rates were low, and there was slack in the economy, allowing government spending to stimulate demand without significantly affecting private investment.

Evidence from the Great Recession Suggests That the Crowding Out