Question

Crowding out, crowding in, and the twin deficits crowding out The stimulative effect that budget deficits can have on private investment is known as:___________

Answer 1

Crowding in.

Step-by-step explanation:

The stimulative effect that budget deficits can have on private investment is known as crowding in.

This ultimately implies that, crowding in is typically as a result of an increase in government spending leading to an increase in private spending of its citizens living in a particular country.

Generally, crowding is caused due to the contractionary fiscal policy. Thus, this results in economic boom and growth as many investors are encouraged to invest in the country.