Question

What is global crowding out effect? Explain this term max. in 4 sentences TT TT Paragraph Arial 3 (12pt) fu Mashup . 14 WHLESS

Answer 1

Global crowding effect

Global crowding effect can be considered as an economic situation which occurs when the government of a particular country borrow very high and it causes higher interest rates in another country. So it will happen when government borrows the resources of another country at a higher manner. crowding effect will occurs when higher government spending leads to increase in private sector. For example if India borrows large amount of U.S dollar from the U.S then there will be an increase in the interest rate in U.S due to the less supply of the U.S dollars.