General Knowledge · General Awareness
How can a high fiscal deficit lead to 'crowding out' in an economy?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1By directly increasing private sector investment in the market
- 2By leading to higher interest rates and reduced private investment✓
- 3By reducing government borrowing and public debt
- 4By enhancing the availability of credit for private businesses
Correct answer
By leading to higher interest rates and reduced private investment
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