Answer:
Large budget deficits may reduce private investment, thereby stifling economic growth.
Explanation:
Crowding out is a term that describes the situation that occurs when the increase in involvement of the government in a particular sector of the market economy, has a direct effect on the remaining market, either on the demand or supply side of the market.
Therefore, crowding out effects which can be caused as a result of government financing large budget deficit, thereby, making them to be involved on a particular sector of the economy, will result to government needing more capital, hence encouraging savings, through increased in interest rate, or selling of bonds and treasury bills with attractive returns, which will leads to reduction in private investment spending, such that it affects negatively the increase in inital total investment.
There are many steps that should be taken before talking to a salesperson and putting any type of deposit on a car. A person needs to test drive the car, get a car loan, and study the market. But they should study the market before anything else. The correct answer is C.
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