Crowding out is best described by which of the following To fund expansionary po

Question

Crowding out is best described by which of the following

To fund expansionary policy the government must borrow and sell bonds. This increases interest rate and works against the expansionary fiscal policy

To fund expansionary policy the government must borrow and sell bonds. This increases interest rate and helps expansionary fiscal policy

To fund expansionary policy the government must borrow and buy bonds. This increases interest rate and works against the expansionary fiscal policy

To fund expansionary policy the government must borrow and sell bonds. This decreases interest rate and works against the expansionary fiscal policy

Explanation / Answer

The correct answer is option (A)

To fund expansionary policy the government must borrow and sell bonds. This increases interest rate and works against the expansionary fiscal policy

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