"Crowding out: a process by which an increase in government expenditure crowds out private-sector activity by raising the cost of borrowing.". Tried looking this up but couldn't understand, is the cost of borrowing intentionally increased? Or is it a side affect of the increase govt expenditure, if so how will increase govt spending increase interest rates?
"Crowding out: a process by which an increase in government expenditure crowds out private-sector activity by raising the cost of borrowing.". Tried looking this up but couldn't understand, is the cost of borrowing intentionally increased? Or is it a side affect of the increase govt expenditure, if so how will increase govt spending increase interest rates?
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