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What Type of Fiscal Policy Will Lead to Crowding Out

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What type of fiscal policy will lead to crowding out in the long run?


Definitions:

Interest Rate

The percentage at which interest is paid by borrowers for the use of money they borrow from a lender.

Reserve Requirement

The portion of depositors' balances that banks must have on hand as cash, a regulation set by central banks to ensure liquidity.

Deposit Multiplier

The ratio that describes the potential increase in bank deposits that can result from an increase in banks' reserves through the fractional reserve banking system.

Banking

The business conducted or services offered by a bank, including deposits, loans, and currency exchange.

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