Crowding out is most likely to occur when the federal government

Crowding out is most likely to occur when the federal government a.Runs a surplus and pays off part of the debt. b.Has a balanced budget and refinances a portion of the debt that matures. c.Runs a deficit and raises taxes to generate more revenue. d.Runs a deficit and sells bonds to make up the difference.

Answer

d. Runs a deficit and sells bonds to make up the difference. When government spending fails to increase overall aggregate demand because higher government spending causes an equivalent fall in private sector spending and investment.

Crowding out is most likely to occur with what changes increase in budget deficit. an increase in the government budget deficit is most likely to result in an increase in interest rates

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