Crowding-Out Effect Of An Expansionary Fiscal Policy

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4. (A) Explain the “crowding-out effect” of an expansionary fiscal policy?
The crowding out effect of an expansionary fiscal policy is an economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending thought the ‘crowding out effect’ is a general term, it is often used in reference to the stifling of private spending in area where government purchasing is high.
It is argued that government borrowing may strive industry of funds and force up interest rates. This argument is put forward by monetarists and n neo –classicists. The argument turns something like this: an increase in government expenditure or a decrease in taxes that the government must borrow more. It cannot borrow from the

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