Question

Crowding out occurs when deficit spending increases interest rates. decreases interest rates. increases consumer spending. decreases consumer spending. increases investment spending.

Answer 1

Answer: increases interest rates

Explanation:

Crowding out occurs when an increase in the involvement of the government in a particular sector of the market economy affects the other sectors of the market.

An example is when an expensionary policy such as government spending leads to the rise in interest rates and which will also reduce the investment spending as investors won't like.to invest in such economy with high interest rates.