What Is the Crowding-Out Effect

Multiple Choice

What is the crowding-out effect?

A) The idea that when a government borrows to finance a deficit,it crowds out private investment because it causes interest rates to fall
B) The idea that when a government borrows to finance a deficit,it crowds out private investment because it causes interest rates to rise
C) The idea that fiscal policy crowds out economic growth
D) The idea that balanced budgets crowd out economic growth