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25 September, 15:22

The crowding-out effect is: strongest when the economy is in a deep recession. weakest when there is demand-pull inflation. equally strong, regardless of the state of the macroeconomy. strongest when the economy is at full employment.

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  1. 25 September, 16:13
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    The answer is strongest when the economy is at full employment.

    the term is used to describe the public-sector spending. It means that purchases would be relatively high when more are employed. They have the capability to acquire the product. It can also be done by borrowing money and lenders can only borrow if their remuneration is sufficient to pay the loan. Another is if they had increased compensation, which makes them buy more than before.
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