Which of the following situations occurs when government spending replaces spending by the private sector?
A) public-sector inflation
B) demarketing
C) deficit spending
D) crowding out

Question

Quizplus · Accepted Answer

Crowding out occurs when government spending increases and causes a decrease in private sector spending. This can happen because the government is competing for the same resources as the private sector, such as labor and capital, and driving up prices. As a result, private businesses may have less money to invest, expand, or hire workers, which can limit economic growth.

Which of the Following Situations Occurs When Government Spending Replaces