The concept of "crowding out" refers to:

CA Foundation · Business Economics · MTP · September 2026
The concept of "crowding out" refers to:
(A) A. The phenomenon where the demand for public goods exceeds the government's ability to provide them.
(B) B. Government spending on public goods leading to reduced private sector investment.
(C) C. The government's attempt to exclude certain individuals from accessing public
(D) D. The competition between private firms in providing public goods.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Government spending on public goods leading to reduced private sector investment.

Topics: Public Finance

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