What Is the Crowding-Out Effect

question 50

Multiple Choice

What is the crowding-out effect?

• A)The idea that when a government borrows to finance a deficit,it crowds out private investment because it causes interest rates to fall
• B)The idea that when a government borrows to finance a deficit,it crowds out private investment because it causes interest rates to rise
• C)The idea that fiscal policy crowds out economic growth
• D)The idea that balanced budgets crowd out economic growth

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