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about the crowding-out model

the crowding-out model suggested that persistent, large government budget deficits are most likely to be associated with:

a. a decrease in private spending

b. an increase in net export

c. a decrease in the demand for loanable funds

d. a decrease in the real rate of interest

2 個解答

  • 1 十年前

    answer is a. It is because when government spends too much, private sector has no opportunity to spend. That is why it is called crowding out.

  • 1 十年前


    It is because the amount of resources in the economy is fixed, if the government spent more $ and it means using more resources in the society. The Private Sector(I) will have less resources to use=using less $.