The Crowding-Out Effect Refers to the Tendency of

Multiple Choice

The crowding-out effect refers to the tendency of

A) the additional borrowing accompanying larger budget deficits to increase interest rates and reduce private spending.
B) higher future taxes accompanying budget deficits to reduce private consumption.
C) the inflation rate to rise when the unemployment rate is low.
D) increases in private savings to reduce interest rates and, thereby, crowd-out government expenditures.