By financial crowding out economist mean ?
Correct answer: B. government borrowing drives up interest rates
- A. credit rationing
- B. government borrowing drives up interest rates
- C. Bank of England controls on commercial bank lending
- D. what the government borrows cannot be used for private investment
Explanation
Financial crowding out occurs when government borrowing increases the demand for loanable funds, pushing up interest rates and reducing private investment. Option d describes a possible consequence but not the standard mechanism.
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