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2 years ago

Which of the following is a correct description of the crowding-out effect of deficit spending?

Business

1 answer:

borishaifa [10]2 years ago

5 0

Answer:

the options are missing, so I looked for them:

a. The buying of government bonds leads to lower interest rates, thereby reducing private investment.

b. The selling of government bonds leads to higher interest rates, thereby reducing private investment.

c. The selling of government bonds leads to lower interest rates, thereby reducing private investment.

d. The buying of government bonds leads to higher interest rates, thereby reducing private investment.

the answer is:

b. The selling of government bonds leads to higher interest rates, thereby reducing private investment.

Explanation:

The crowding out effect happens when the government increases its spending level in order to engage in an expansionary fiscal policy but someone needs to pay for this extra spending. In order for the government to finance their spending, they have to choose to either increase taxes or issue more debt. When they issue more debt, they end up decreasing private investment since money that could be used by private companies is used by the government instead.

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Answer:

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2 years ago

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The answer is: will not make a lot of money

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It can also be regarded as a psychological phenomenon where individual strive to meet a consensus within a group.

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Match the terms to their definitions.

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The question requires matching the terms to their definitions.

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