Crowding Out
0.0(0)
Studied by 6 people
Call Kai
Learn
Practice Test
Spaced Repetition
Match
Flashcards
Knowt PlayCard Sorting
1/3
Last updated 2:11 PM on 1/26/23
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No analytics yet
Send a link to your students to track their progress
4 Terms
1
New cards
What is the crowding out hypothesis
\
* when free-market economists argued against the rising share of GDP being taken by the public sector.
* when free-market economists argued against the rising share of GDP being taken by the public sector.
2
New cards
Crowding Out
* refers to negative impact that government spending can have on private investment
* Suggests when government increases its spending
* Increases the demand for goods and services - leads to higher interest rates and inflation
* Makes borrowing more expensive for private investors
* Private investment may decrease
* Suggests when government increases its spending
* Increases the demand for goods and services - leads to higher interest rates and inflation
* Makes borrowing more expensive for private investors
* Private investment may decrease
3
New cards
Keynesian theory multiplier effect on crowding out
Government spending can increase economic activity and boost private investment
4
New cards
response to crowding out point
Ovesrated - government spending has positive impact on private investment → increases AD and more stable environment economically.