Respuesta :
The crowding-out effect refers to the possibility that deficit financing will increase the interest rate and reduce investment.
What is crowding-out effect?
Crowding out is a phenomena in economics that happens when growing government participation in a market economy sector significantly impacts the rest of the market, either on the supply or demand side of the market.
When expansive fiscal policy results in less private sector investment spending, this is one form that is commonly debated. Government expenditure "crowds out" investment since it requires more loanable money, raising interest rates in the process and lowering investment spending. This fundamental examination has been expanded to include a number of channels, which might result in a little or even negative impact in the overall output.
Other economists use the term "crowding out" to describe the government supplying an item or service that would otherwise be available to private enterprise and be subject exclusively to the market dynamics found in voluntary trade.
The term "crowding out" is often used by behavioral economists and other social scientists to characterize a drawback of solutions based on private trade: the displacement of intrinsic motivation and prosocial norms as a result of the financial incentives of voluntary market exchange.
To learn more about the crowding-out from the given link
https://brainly.com/question/25589179
#SPJ4
the crowding-out effect refers to the possibility that multiple choice the asset demand for money varies inversely with the interest rate. deficit financing will increase the interest rate and reduce investment. when used simultaneously, expansionary fiscal and monetary policies are counterproductive. an increase in the supply of money will result in a decline in velocity.
