How Can Public Investment Mitigate the Crowding-Out Effect of Financing

question 292

Essay

How can public investment mitigate the crowding-out effect of financing the deficit by selling bonds to the public?

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Definitions:

Conditioned Response

A learned response to a previously neutral stimulus after repeated pairing with an unconditioned stimulus.

Unconditioned Response

The response normally produced by the conditioned response (e.g., salivation being produced by food).

External Locus

A belief system where individuals perceive their outcomes and experiences as being controlled by external forces or fate rather than their own actions.

Internal Locus

The belief that one's actions and outcomes are a result of personal decisions and efforts rather than external factors.