Ask Question
BusinessBusiness
26 November, 12:48

Crowding out occurs when ...

a. investment declines because a budget deficit makes interest rates rise.

b. investment increases because a budget surplus makes interest rates rise.

c. investment increases because a budget surplus makes interest rates fall.

d. investment declines because a budget deficit makes interest rates fall.

+2
Answers (1)
  1. 26 November, 14:36
    0
    Answer: Option A

    Explanation: Crowding effect refers to the situation when due to over involvement of government in a sector of economy heavily affects the other sectors of the economy.

    In such a case, government spends on a sector more than it needs. This leads to lack of funding from government on other sectors and thus reduced investment and higher interest rates.

    From the above we can conclude that the correct option is A.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Crowding out occurs when ... a. investment declines because a budget deficit makes interest rates rise. b. investment increases because a ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
2. How does a command economy differ from a market economy?
Answers (1)
Which facility has enabled rural hospitals to have increased access to specialist consultations?
Answers (1)
You find that the bid and ask prices for a stock are $11.75 and $12.50, respectively. If you purchase or sell the stock, you must pay a flat commission of $15.
Answers (1)
Delicious Food Products is famous for its trail mix. The main ingredient of the trail mix is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor.
Answers (1)
Timberlake Company owns equipment with a cost of $165,000 and accumulated depreciation of $60,000 that can be sold for $82,000 less a 6% sales commission.
Answers (2)
New Questions in Business
Soles is a footwear company which has recently set up its store in Ambrosia. To manufacture its products, Soles incurs a range of different costs. Which of the following would be an example of an indirect cost? a. Salary paid to factory workersb.
Answers (1)
The Nolan Corporation finds it is necessary to determine its marginal cost of capital. Nolan's current capital structure calls for 30 percent debt, 20 percent preferred stock, and 50 percent common equity.
Answers (1)
Gaston owns equipment that cost $17,000 with accumulated depreciation of $3,400. Gaston sells the equipment for $12,200.
Answers (1)
If the supply of loanable funds exceeds the demand then borrowers will bid up the interst rate. True / False.
Answers (1)
The scientific method begins with A. the development of a formal hypothesis. B. the gathering of information. C. the identification of a problem for investigation. D. methodical observation of a phenomenon of interest.
Answers (1)
Home » Business » Crowding out occurs when ... a. investment declines because a budget deficit makes interest rates rise. b. investment increases because a budget surplus makes interest rates rise. c.
Sign Up Forgot Password?