Question

The crowding-out effect arises when government select one:

a. lends in the money market, thus decreasing interest rates.
b. borrows in the money market, thus decreasing interest rates.
c. lends in the money market, thus increasing interest rates.
d. borrows in the money market, thus causing an increase in interest rates.

Answer 1

It would be B. borrows in the money market, thus decreasing interest rates.