Which of the following accurately describes the phenomenon of crowding out? government borrowing pushes up interest rates, driving out private investment and consumption government spending drive up the budget deficit government spending causes more goods to be allocated to the public sector and fewer are available for the private sector Increasing the proportion of public sector spending in the composition of GDP renders production less competitive and therefore less efficient.
Which of the following accurately describes the phenomenon of crowding out? government borrowing pushes up interest rates, driving out private investment and consumption government spending drive up the budget deficit government spending causes more goods to be allocated to the public sector and fewer are available for the private sector Increasing the proportion of public sector spending in the composition of GDP renders production less competitive and therefore less efficient.
Chapter15: Fiscal Policy
Section: Chapter Questions
Problem 1SQ
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Which of the following accurately describes the phenomenon of crowding out?
government borrowing pushes up interest rates, driving out private investment and consumption
government spending drive up the budget deficit
government spending causes more goods to be allocated to the public sector and fewer are available for the private sector
Increasing the proportion of public sector spending in the composition of
GDP renders production less competitive and therefore less efficient.
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