Author Question: Does government borrowing crowd out private sector spending?[br][br][b][color=#165FFA]Question ... (Read 72 times)

skymedlock

  • Hero Member
  • *****
  • Posts: 561
Does government borrowing crowd out private sector spending?

Question 2

A strong U.S. dollar is one that has:
 a. c and e.
  b. d and e.
  c. depreciated.
  d. appreciated.
  e. helped U.S. exporters.



kingfahad97

  • Sr. Member
  • ****
  • Posts: 308
Answer to Question 1

Crowding out refers to government deficit spending financed by borrowing that increases interest rates and thereby reduces private borrowing and spending. The crowding out effect probably exists, but to what extent is debatable. If deficit spending is used to increase our nation's production possibilities through public investment in infrastructure, then the crowding out effect is reduced. However, history shows that rarely is there a significant amount of any deficit allocated toward productive-enhancing public investment infrastructure. The extent of a crowding-out effect is important because any crowding out renders fiscal policy less effective in stimulating the economy during a recession.

Answer to Question 2

d



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Did you know?

In most cases, kidneys can recover from almost complete loss of function, such as in acute kidney (renal) failure.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

As many as 20% of Americans have been infected by the fungus known as Histoplasmosis. While most people are asymptomatic or only have slight symptoms, infection can progress to a rapid and potentially fatal superinfection.

Did you know?

Lower drug doses for elderly patients should be used first, with titrations of the dose as tolerated to prevent unwanted drug-related pharmacodynamic effects.

For a complete list of videos, visit our video library