2 years ago

The crowding‑out effect describes a scenario in which federal deficit spending causes:

Business

1 answer:

marshall27 [118]2 years ago

7 0

Answer:

INCREASED INTEREST RATES WHICH REDUCES PRIVATE SPENDING.

Explanation:

Crowding out occurs when government increases its spending thus leading to a drop in private spending. It is a deliberate government policy to push out private spending so as to create more funds for loans. This then results in increased interest rates.

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