Crowding Out Refers to the Situation in Which

Multiple Choice

Crowding out refers to the situation in which

A) borrowing by the federal government raises interest rates and causes firms to invest less.
B) foreigners sell their bonds and purchase U.S. goods and services.
C) borrowing by the federal government causes state and local governments to lower their taxes.
D) increased federal taxes to balance the budget causes interest rates to increase and consumer credit to decrease.