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Crowding Out in Economics: Definition & Effects

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What's the best explanation of crowding out?

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1. What type of government policy can cause crowding out?

2. What happens to interest rates if government borrowing increases?

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About This Quiz & Worksheet

This quiz and corresponding worksheet will help you gauge your understanding of what crowding out in economics means. Topics you'll need to know to pass the quiz include understanding what happens in a crowding out situation and problems associated with crowding out.

Quiz & Worksheet Goals

Use these assessment tools to assess your knowledge of:

  • What 'crowding out' means and what can cause it
  • The effect on interest rates from increased government borrowing
  • How crowding out affects the private sector
  • Problems posed by crowding out

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Defining key concepts - ensure that you can accurately define main phrases, such as crowding out
  • Reading comprehension - ensure that you draw the most important information from the related lesson on crowding out in economics
  • Interpreting information - verify that you can read information regarding how crowding out is related to the public and private sectors and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about government economic policies

Additional Learning

To learn more about what the characteristics of an economy can look like in a crowding out situation, review the corresponding lesson on Crowding Out in Economics. This lesson covers the following objectives:

  • Explain what happens in a crowding out situation
  • Review three problems caused by crowding out
  • Know what leads to crowding out
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