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Basic Question 11 of 11
The crowding-out effect suggests that government borrowing to finance higher expenditures will most likely increase ______.
B. the real interest rate
C. the supply of loanable funds
A. private investment
B. the real interest rate
C. the supply of loanable funds
User Contributed Comments 3
| User | Comment |
|---|---|
| bravoshieh | Any idea why there is a decrease in the supply of loanable funds? Thought an increase in the real interest rate only drives the supply up? |
| Antoinepo | increase in interest rate comes from the lack of loanable funds |
| Antoinepo | lack of loanable funds comes from the government excessive borrowing |
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Tamara Schultz
Learning Outcome Statements
explain the implementation of fiscal policy and difficulties of implementation as well as whether a fiscal policy is expansionary or contractionary
CFA® 2025 Level I Curriculum, Volume 1, Module 3.