Economics · Fiscal Policy

The 'Crowding-out effect' in macroeconomics implies that:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1Increased public sector spending replaces, or drives down, private sector spending✓
2Increased public sector spending encourages higher private investment
3Increased public spending always leads to immediate economic recession
4Excessive private spending causes price deflation

Correct answer

Increased public sector spending replaces, or drives down, private sector spending

Save this question and verified answer as a clean study sheet with live clickable link.

👥

Challenge your peer aspirants on WhatsApp or Telegram to solve this question!

Online Test Series

Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.

Chapter Practice

Want more practice questions on Fiscal Policy?

Solve complete topic-wise tests with detailed solutions on GkGet.

Recommended practice questions in Economics · Fiscal Policy

The Dandi March, also known as the Salt Satyagraha, was led by which influential leader?

Which act formally granted independence to India, marking the end of British rule?

Who was the key figure in establishing the Indian National Congress?

Related Practice Questions