Crowding out occurs
a. investment declines because a budget deficit makes interest rates rise.
b. investment increases because a budget surplus makes interest rates rise.
c. investment increases because a budget surplus makes interest rates fall.
d. investment declines because a budget deficit makes interest rates fall.

Option A

Explanation: Crowding effect refers to the situation when due to over involvement of government in a sector of economy heavily affects the other sectors of the economy.

In such a case, government spends on a sector more than it needs. This leads to lack of funding from government on other sectors and thus reduced investment and higher interest rates.

From the above we can conclude that the correct option is A.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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