With reference to the ‘Crowding Out Effect’ in an economy, consider the following statements:
It occurs when increased government borrowing leads to a rise in real interest rates, thereby reducing private investment expenditure.
An expansionary fiscal policy always leads to a crowding out effect, regardless of whether the economy is in a deep recession or at full employment.
The “Crowding In” effect is a phenomenon where government spending on infrastructure complements private investment, potentially offsetting the negative impacts of higher interest rates.
Which of the statements given above is/are correct?
Your result is as below :
March 14, 2026
March 12, 2026
March 11, 2026
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