Final answer:
Private saving, government saving, and foreign saving can be used to finance investment. Crowding out occurs when increased government borrowing leads to a decrease in private sector investment.
Step-by-step explanation:
The three sources of saving that can be used to finance investment are private saving, government saving, and foreign saving. Private saving refers to the amount of income that individuals and firms retain after spending on consumption. Government saving is the amount of tax revenue that exceeds government spending. Foreign saving is the inflow of financial capital from foreign investors.Crowding out refers to the phenomenon where increased government borrowing leads to a decrease in private sector investment. This occurs because when the government competes for limited funds in the financial market, interest rates rise, making it more expensive for firms to borrow and invest.