The contraction of private investment spending due to deficit spending by the Government is called ........

Indian Economy (CDS) Money and banking

The contraction of private investment spending due to deficit spending by the Government is called

This questions was previously asked in

2023 CDS -1 GK

crowding out

crowding in

pump priming

dumping

- Option 1: Crowding Out

- Crowding Out refers to a situation where increased government spending reduces private sector investment.

- This happens because government borrowing can lead to higher interest rates.

- Option 2: Crowding In

- Crowding In is when government spending leads to an increase in private sector investment.

- This can occur if government spending stimulates economic growth.

- Option 3: Pump Priming

- Pump Priming involves stimulating an economy, usually by government spending, to encourage economic activity.

- It aims to increase demand and eventually lead to job creation.

- Option 4: Dumping

- Dumping is when a country sells goods in another country at a price lower than the market value.

- It is a trade practice used to gain market share.

Correct Answer: Option 1 - Crowding Out

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