Examlex
Crowding out can occur when a government budget ________ raises the real interest rate and the equilibrium quantity of investment ________.
Excess Reserves
Banks' reserves that exceed the minimum required by the central bank, available for lending or investment.
Interest Rate
The price, expressed as a percentage of the principal, that a borrower must pay a lender for the use of funds.
Excess Reserves
are bank reserves held in excess of what is required by the central bank, which can be lent out to earn interest.
Money Expansion Process
The increase in the total amount of money in circulation or in the money supply, facilitated by mechanisms such as lower interest rates or quantitative easing.
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