what caused the crowding out affect after 9/11? was it increased interest rates or tax rises? Please explain y

Answer 1

Crowding out means the government spending crowding out private investment. So after 9/11 the government might have borrowed to finance the various security plans which were immediately required by the USA. So crowding out might have occured due to this emergency borrowing from private saving.

Answer 2

The crowding out effect is caused by the government spending lots of money. As they spend lots of money then interest rates rise and this crowds out private sector investment. With respect to 9/11, I am not aware that the crowding out effect happened, however I have not studied that question specifically. Hope that helps a little bit.

Answer 3

crowding out is a term referring to two people who spend money. One is the consumer and the other is the Govt. Both spend money. By both spending money, we end up in an inflationary situation, however, crowding out occurs when the economy is in a downward spiral and the govt tries to stimulate the economy by spending money. In effect this sole effort sort pushes the consumer to the side. Taxes or Interest is Keynesian. The government subscribes to a monetarist system. As far as 9-11, the economy has been in an inflationary situation for sometime. Both sides of the house with low taxes and low interest rates coupled with our current war is driving our economy at warp speed with deficit that is becoming a grave concern.