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What is the crowding-out effect?


the loss of funds for private investment due to government borrowing

a situation in which the government spends more than it takes in

all the money the federal government owes to bondholders

a situation in which the government takes in more than it spends

Verified Answer :

this will help u answer this


crowding out : is a situation where personal consumption of goods and services and investments by busimess are reduced bc of increase in government spending and deflicts financing sucking available financial resources and raing inserts rates

anitakury98

Answer:

option C  

"the loss of funds for private investment due to government borrowing"

Explanation:

The crowding out effect is an economic theory which supports that rising public sector spending leads to a reduction of private sector spending or even eliminates it. When the government increases its borrowing, meaning expansionary fiscal policy, it rises the real interest rate as well, which has the effect of captivating the economy's lending capacity and of discouraging businesses from making capital investments.

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