What term describes the concept that increased government expenditure leads to a decrease in private sector investment?

Multiple choice question for Money, Interest Rates And Output. Select an option, then review the explanation below.

Explanation

The term 'crowding-out' refers to the phenomenon where government spending results in reduced private investment. Other options like 'budgetary restraint' and 'investment decline' do not specifically capture this economic concept.

Practice related questions from the same subject.

1.How does a decrease in interest rates affect the monetary base, consumer credit availability, and the cost of consumer credit?
2.Which variable do central banks typically set directly, and which variable adjusts as a consequence?
3.What is it called when the central bank purchases financial assets in the open market to expand the monetary base?
4.M4 is considered a __________ monetary aggregate and encompasses deposits held at both __________ and __________?
5.Assuming all other factors remain constant, what happens to the quantity of real money holdings when interest rates increase?

What term describes the concept that increased government expenditure leads to a decrease in private sector investment?

Explanation

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