Economics · Crowding Out Effect
Which of the following statements regarding crowding out effect is CORRECT?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It increases interest rates negatively
- 2Crowding out occurs only in closed economy
- 3Government borrowing increases private savings always
- 4Government borrowing reduces private investment✓
Correct answer
Government borrowing reduces private investment
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