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When crowding out occurs in an economy, it can reduce expenditures for ... Multiple Choice government...

When crowding out occurs in an economy, it can reduce expenditures for ...

Multiple Choice

government purchases.

consumer purchases.

business investments.

both consumer purchases and business investments.

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Answer #1
  • Option d is the answer.
  • Both consumer purchases and business investments.
  • When crowding out occurs in an economy, it can reduce expenditures for both consumer purchases and business investments. Crowding out increases government spending and thereby limits the individual spending and business investments. Government involvement in a sector of a market Is the main reason for crowding out in that sector. It demands more loanable funds and causes the interest rates to rise.
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