What is "crowding out" effect? (1 Viewer)

yma

Member
Joined
May 31, 2014
Messages
71
Gender
Female
HSC
2014
It's something about the fiscal policy, right? But I can't find it in the textbook


Sent from my iPad using Tapatalk
 

nerdasdasd

Dont.msg.me.about.english
Joined
Jul 29, 2009
Messages
5,353
Location
A, A
Gender
Male
HSC
2012
Uni Grad
2017
Crowding out effect : the offset in aggregate demand that results when expansionary fiscal policies induces the RBA to increase interest rates
 

nerdasdasd

Dont.msg.me.about.english
Joined
Jul 29, 2009
Messages
5,353
Location
A, A
Gender
Male
HSC
2012
Uni Grad
2017
Government increases spending > higher aggregate demand > higher inflation > RBA INCREASES RATES > Borrowing more expensive > demand for investment falls
 

yma

Member
Joined
May 31, 2014
Messages
71
Gender
Female
HSC
2014
Government increases spending > higher aggregate demand > higher inflation > RBA INCREASES RATES > Borrowing more expensive > demand for investment falls
It is demand for domestic investment falls, right? As a result, investors will invest overseas, right?


Sent from my iPad using Tapatalk
 

Chocolatebubble

Active Member
Joined
Sep 13, 2012
Messages
157
Location
Sydney, Australia, Australia
Gender
Female
HSC
2014
Uni Grad
2019
When the govt enters the market as a buyer and then increases interest rates to massively high levels to get funds and the investors are like D: nope and effectively get pushed out and can't invest domestically because of it.

then theres international crowding out where the high aud prevents investment
 

seventhroot

gg no re
Joined
Aug 3, 2014
Messages
2,803
Gender
Male
HSC
2013
When the govt enters the market as a buyer and then increases interest rates to massively high levels to get funds and the investors are like D: nope and effectively get pushed out and can't invest domestically because of it.

then theres international crowding out where the high aud prevents investment
lel
 

Users Who Are Viewing This Thread (Users: 0, Guests: 1)

Top