The crowding-out effect from government borrowing to finance the public debt is reduced when:_____
A. The economy is experiencing a period of high inflation
B. The economy is operating at the full-employment level of output
C. Public investment complements private investment
D. Public investment substitutes for private investment

Respuesta :

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Answer:

D

Explanation:

During crowding out government makes more expenditure (spending), as a result they take up more projects, that would have been executed by private sector. Hence, there's a reduction in private sector spending.

In every economy its the role of government to create an enabling environment for private sector to thrive, thus, an economy is stimulated for growth when there is private spending.