Crowding out has the effect(s) of:

A. reducing the effectiveness of monetary policy if the crowding out occurs in financial markets.

B. decreasing the value of a nation’s currency if the crowding out occurs in financial markets.

C. increasing the effectiveness of fiscal policy if the crowding out occurs in financial markets and increasing the effectiveness of monetary policy if the crowding out occurs in product markets.

D. decreasing the effectiveness of fiscal policy if the crowding out occurs in financial markets and decreasing the effectiveness of both fiscal and monetary policy if the crowding out occurs in product markets.

E. increasing the price of government bonds if the crowding out occurs in financial markets.

Answer rating: 100% (QA)

Answer C Crowding out is when increased government spending lea... View the full answer