The term "crowding out" relates to the decrease in
A) consumption expenditure from an increase in investment.
B) the real interest rate from a government budget deficit.
C) private investment from a government budget deficit.
D) saving from an increase in disposable income.

Question

Quizplus · Accepted Answer

Crowding out occurs when increased government spending leads to a reduction in private investment. This can happen because government borrowing to finance its deficit can lead to higher interest rates, making borrowing more expensive for businesses and individuals.

The Term "Crowding Out" Relates to the Decrease in