What is the term used to describe the situation where government borrowing reduces private sector borrowing?

Understanding Crowding Out in the Loanable Funds Market

Interactive Video
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Economics, Business, Social Studies
•
10th - 12th Grade
•
Easy

Emma Peterson
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Deflation
Crowding Out
Inflation
Monetary Policy
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the loanable funds market model, what does the vertical axis represent?
Demand for loanable funds
Supply of loanable funds
Quantity of loanable funds
Real interest rate
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which curve in the loanable funds market model represents the price of borrowing?
Supply curve
Demand curve
Equilibrium curve
Real interest rate curve
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the demand curve for loanable funds when the government decides to borrow more?
It remains unchanged
It shifts to the right
It shifts to the left
It becomes vertical
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the primary cause of the demand curve shift in the loanable funds market when the government borrows?
Decrease in supply of loanable funds
Increase in supply of loanable funds
Decrease in demand for loanable funds
Increase in demand for loanable funds
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does an increase in real interest rates affect private sector borrowing?
Private sector borrows more
Private sector borrows less
No change in private sector borrowing
Private sector borrowing becomes unpredictable
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the result of higher borrowing costs on private investment?
Decreased investment
Investment becomes more efficient
No change in investment
Increased investment
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