Question

If the government reduces some of the national debt and as a result households have more money to spend, this can result in: Group of answer choices Crowding in. Fiscal crowding. External debt. Deficit spending.

Answer 1

If the government reduces some of the national debt and as a result households have more money to spend, this can result in crowding in.

What is crowding in?

Crowding in is when an increase in government spending increases the amount of money in the economy. This increases the money that households can spend and it also increases the level of investment spending in the economy.