"Crowding out" refers to the decrease in ________ that may result from an increase in government spending.
A)private investment
B)imports
C)private saving
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When the government increases its spending, it may compete with private investors for available funds, and thus raise interest rates. As a result, private investment may decrease, which is known as crowding out. While imports and private saving may also be affected by government spending, they are not direct consequences of crowding out.

"Crowding Out" Refers to the Decrease in ________ That May