Crowding in refers to
A)A reduction in private sector borrowing caused by increased government spending.
B)A reduction in private sector borrowing caused by a reduction in government spending.
C)An increase in private sector borrowing caused by decreased government borrowing.

Question

Quizplus · Accepted Answer

Crowding in refers to an increase in private sector borrowing caused by decreased government borrowing. Essentially, when the government borrows less, it frees up more money in the market, which can then be borrowed by the private sector. This increase in private sector borrowing is known as "crowding in."

Crowding in Refers to