Which of the following terms is used to describe an expansionary fiscal policy that has little impact on an economy because the necessary increase in government borrowing leads to a decrease in investment spending?
A) backlash offset
B) fiscal reversion
C) crowding out
D) multiplier effect

Question

Quizplus · Accepted Answer

Crowding out occurs when increased government borrowing to finance its budget deficit reduces investment spending in the economy because it leads to higher interest rates.

Which of the Following Terms Is Used to Describe an Expansionary