2023 · Q42
The contraction of private investment spending due to deficit spending by the Government is called
General KnowledgeIndian Economy
- Acrowding out
- Bcrowding in
- Cpump priming
- Ddumping
Explanation
When government deficit spending borrows heavily, it drives up interest rates and absorbs loanable funds, reducing ('crowding out') private investment spending. 'Crowding in' is the opposite (public spending stimulating private investment), 'pump priming' is stimulus spending itself, and 'dumping' is predatory export pricing. The described phenomenon is crowding out.