The crowding-out effect refers to the situation where
A. foreign spending is favored over domestic spending.
B. government borrowing reduces private sector borrowing and spending.
C. the United States Treasury prints new money that the government uses to force increases in private investment.
D. the creation of large amounts of money to finance government borrowing produces an inflation that forces private spending to decrease.
B. government borrowing reduces private sector borrowing and spending.
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