Crowding out is more likely to happen when the federal government
government A. It generates a surplus and pays part of the debt. BA a balanced budget and refinances part of the debt
who is maturing. vs. Run a deficit and raise taxes to generate more revenue. D. She runs a deficit and sells bonds to make up the difference.
Answer 1
D. Run a deficit and
sells bonds to make up the difference.
When public spending does not increase overall value added
demand because higher government spending causes an equivalent drop
private sector spending and investment.
Crowding out is more likely to happen with increasing changes
in the budget deficit. an increase in the state budget deficit is
will likely cause interest rates to rise