Long–Run Consequences of Stabilization Policies
What is "crowding out" in the context of fiscal policy?
What secondary effect might occur if expansionary monetary policy coincides with significant increases in federal spending during an economic boom?
What happens when businesses reduce their investments due to higher interest rates?
What happens to interest rates due to the crowding-out effect?
When a country experiences substantial external debt due mainly by public sector borrowing from abroad, what is one possible negative outcome related directly crowding out?
What could be a potential consequence of crowding out during periods of economic expansion?
What would be a consequence of increased government deficits financed through borrowing from foreign sources?
How are we doing?
Give us your feedback and let us know how we can improve
In which phase of the business cycle would crowding out most likely limit economic growth by inhibiting corporate capital expenditures?
Assuming rational expectations, how might consumers react to anticipated government deficit spending funded through bond issuance that they expect will lead to future tax increases?
When does crowding out typically occur in an economy?